Kowenhoven v. County of Allegheny

• Decision Date: 18 July 2006
• Citation: 901 A.2d 1003
• Parties: Thomas and Katherine KOWENHOVEN, Robert and Michelle Dewitt, and Daniel and Carol Holtgraver, Appellants, v. The COUNTY OF ALLEGHENY and the Board of Assessment of Allegheny County, Appellees.
• Court: Pennsylvania Supreme Court

901 A.2d 1003

Thomas and Katherine KOWENHOVEN, Robert and Michelle Dewitt, and Daniel and Carol Holtgraver, Appellants, v. The COUNTY OF ALLEGHENY and the Board of Assessment of Allegheny County, Appellees.

Supreme Court of Pennsylvania.

Argued September 12, 2005.

Decided July 18, 2006.

COPYRIGHT MATERIAL OMITTED

John M. Silvestri, Esq., for Thomas Kowenhoven, et al.

Michael Henry Wojcik, Esq., Caroline P. Liebenguth, Esq., for Allegheny County.

Isobel Storch, Esq., Pittsburgh, for Allegheny County Board of Assessment.

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

OPINION

Justice SAYLOR.

The primary issue in this appeal is whether equity jurisdiction lies in the common pleas court to address a taxpayer's claim that the manner in which the county adjudicates tax assessment appeals violates constitutional due process guarantees.

I.

This action was commenced when Appellants filed a class-action complaint in the court of common pleas, invoking the court's equitable jurisdiction and naming as defendants Allegheny County (the "County"), as well as its Board of Property Assessment Appeals and Review (the "Board"). In the complaint, Appellants challenged certain aspects of the Board's procedures for disposing of tax assessment appeals, and sought, inter alia, declaratory and injunctive relief.

Within the County, tax assessment appeals are conducted pursuant to the Second Class County Assessment Law, the General County Assessment Law,¹ and the Allegheny County Administrative Code. Pursuant to the latter, the Board designates a hearing officer to conduct hearings, issue findings of fact and conclusions of law, and make a recommendation to the full Board. See Allegheny County Administrative Code § 5-207.07(E). In the event that the recommendation is not accepted by a majority, the Board's rules require it to review any recordings and all evidence supplied at the hearing or through post-hearing submissions, and the Board's decision must be based upon valuation methodologies consistent with the standards of nationally recognized assessment and appraisal industry organizations. See Board Rule No. IV, § 5.

According to the complaint, in addition to its rules and the County Administrative Code, in April 2002 the Board issued a memo to hearing officers and case reviewers concerning practices and procedures,² advising, in relevant part:

When making recommendations, 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 date [sic] in SMDA [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....

* * *

Every party deserves a well reasoned recommendation. Hearing Officers are encouraged to carefully consider the evidence. If the subject property is located in a market area the Hearing Officer is not familiar with, scrutinizing the marketplace on SMDA is helpful to identify anomalies....

* * *

Assessments reflect values as of January 1 of the year for which the assessment is certified. Hearing Officers shall use their professional judgment and knowledge of the area in determining whether appreciation between 2001 and 2002 is applicable and the amount of appreciation that is appropriate. (2% is only a rule of thumb)....

Complaint at 5-6 (emphasis and bracketed text in original).³

Further, the complaint alleged that Appellants Thomas and Katherine Kowenhoven, Robert and Michele Dewitt, and Daniel and Carol Holtgraver each own a home located in the County. Each couple filed a timely appeal of their 2002 assessment which was determined by the Board following a hearing before a hearing officer. With respect to the Kowenhovens and Holtgravers, the hearing officer recommended a reduction in their 2002 assessment, but the Board ultimately issued decisions maintaining the original assessments in place with no reduction. In both of these matters, post-it notes were affixed to the hearing officer's reports some time after the hearing and while the matters were pending before the Board, indicating disagreement with the hearing officer's recommendations and denoting a basis not introduced into evidence to justify maintaining the original assessments and thereby departing upward from the hearing officer's recommendation. As to Appellants Robert and Michelle Dewitt, the hearing officer recommended an increase in assessment, utilizing a three-percent appreciation rate, with which the Board agreed.

In light of the above, Appellants argued that the County's assessment practices improperly allowed the Board to consider evidence obtained outside of the record, thereby violating Appellants' due process rights. Appellants also averred that the injection of post-hearing evidence in these and, it is believed, hundreds of other cases, was performed without notice to the taxpayer. Therefore, Appellants asked that the Board be directed to re-decide all cases in which it can be ascertained from the hearing files that evidence outside of the hearing was submitted for consideration as to tax years 2001 or 2002. Appellants also requested relief under Section 1983 of the federal Civil Rights Act of 1871 in the form of unspecified damages, fees, and costs. See 42 U.S.C. § 1983.⁴ Appellees filed preliminary objections, asserting that Appellants could appeal the Board's assessment decisions to the court of common pleas for a de novo hearing, which, in Appellees' view, would constitute an adequate remedy at law so as to preclude injunctive and declaratory relief in the present matter.

By opinion and order dated July 10, 2003, the trial court sustained the preliminary objections and dismissed the complaint, reasoning that, while a taxpayer may bring an equity action to mount a facial challenge to the constitutionality of a tax statute, such a proceeding may not be maintained to test the legality or constitutionality of the manner in which the statute is administered. See Tr. Ct. Op. at 5 (citing Borough of Green Tree v. Board of Prop. Assessments, Appeals & Review of Allegheny County, 459 Pa. 268, 328 A.2d 819 (1974) (plurality)). The trial court interpreted the allegations of the complaint as primarily raising an issue concerning whether the Board had followed its own rules in disposing of Appellants' assessment grievances, noting:

There have been thousands of appeals filed with the Assessment Board from 2001 and 2002 assessments. If the courts became involved every time the procedures of the Assessment Board are not followed, the courts — rather than the Board of Assessment — would be operating the assessment program.

Trial Court Op. at 4. Apparently on this understanding of the complaint, the trial court rejected the state law equity claim because of the availability of an adequate statutory remedy, namely, a de novo appeal to the common pleas court. The court also dismissed Appellants' Section 1983 claim based upon Murtagh v. County of Berks, 715 A.2d 548, 551 (Pa.Cmwlth. 1998) (en banc), which held that Section 1983 does not provide a basis for state courts to award damages when an adequate legal remedy exists.

A divided Commonwealth Court affirmed. See Kowenhoven v. County of Allegheny, 847 A.2d 172 (Pa.Cmwlth.2004) (en banc). The majority proceeded on the understanding that Appellants' challenge also — and centrally — included a contention that the methodology generally employed by the Board pursuant to the above-quoted practices and procedures memo was fatally flawed on due process grounds. In thus addressing Appellants' constitutional claim, the Commonwealth Court majority acknowledged that, in Ward v. Village of Monroeville, Ohio, 409 U.S. 57, 93 S.Ct. 80, 34 L.Ed.2d 267 (1972), the United States Supreme Court held that due process is required at every level of judicial and quasi-judicial proceedings. In Ward, the statute at issue permitted an interested executive to sit as a judge and conduct a hearing at the first level of judicial proceedings. See id. at 57-58, 93 S.Ct. at 82. While a party had the right to an appeal de novo to a trial court, the Supreme Court concluded that the statutory procedure could not be deemed constitutionally acceptable merely because the state eventually offered a defendant an impartial adjudication. See id. at 61-62, 93 S.Ct. at 83-84.

The Commonwealth Court majority distinguished Ward from Appellants' situation, however, on two principal bases. First, it emphasized that the County Administrative Code does not affirmatively permit a hearing officer or the Board to consider extra-record evidence; thus, although stating that the Board's procedure "appears to fly in the face of due process notions," Kowenhoven, 847 A.2d at 174, and that it "inject[s] an improper element into the process of adjudication," id. at 176, the majority reasoned that the present challenge, unlike in Ward, is to the application of the statute rather than the statute itself. See id. at 175-76. Second, the majority noted that the procedural defect at issue in Ward was that the magistrate retained a financial interest in the outcome of the case, whereas the present dispute concerns the assertion that the Board, as a matter of policy, improperly considers extra-record evidence in the adjudication process. As these claims implicate two distinct aspects of procedural due process, the Commonwealth Court majority considered the Supreme Court's reasoning in Ward inapplicable to the present case. See id. at 175-76. Hence, and in light of the subsequent de novo review statutorily afforded to Appellants, the majority held that equitable relief was unavailable. Finally, concerning the civil...