Lehigh Valley Props., Inc. v. Portnoff Law Assocs., CIVIL ACTION NO. 19-4892
| Decision Date | 27 April 2020 |
| Docket Number | CIVIL ACTION NO. 19-4892 |
| Parties | LEHIGH VALLEY PROPERTIES, INC., et al. v. PORTNOFF LAW ASSOCIATES, LTD., et al. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Plaintiffs brought this action pro se under 42 U.S.C. §1983 and the Racketeer Influenced and Corrupt Organizations Act ("RICO") 18 U.S.C. §§1961-1968, claiming that the Defendants' methods in collecting allegedly delinquent school property taxes from Plaintiffs violated their rights under the Due Process and Equal Protection Clauses of the Fourteenth Amendment (Count One), violated RICO (Count Two) and violated the Pennsylvania Constitution (Count Three). After the Defendants filed motions to dismiss based on, inter alia, the Tax Injunction Act ("TIA"), 28 U.S.C. §1341, the Plaintiffs filed an Amended Complaint in which they asserted the same three counts, but deleted most references to school taxes and instead challenged the Defendants' methods in collecting penalties, interest and attorney's fees.1 Plaintiff seek injunctive relief and an award of damages. Once again, all the Defendants have filed motions under Fed. R. Civ. P. 12(b)(1) to dismiss this action for lack of subject-matter jurisdiction as barred by, interalia, the TIA and the principle of comity2. For the reasons that follow the motions will be granted.
In considering a motion to dismiss under Rule 12(b)(1), the Court must first determine whether Defendants allege a facial or factual deficiency. See Davis v. Wells Fargo, 824 F.3d 333, 346 (3d Cir. 2016). A facial attack concerns "'an alleged pleading deficiency' whereas a factual attack concerns 'the actual failure of a plaintiff's claim to comport factually with the jurisdictional prerequisites.'" CNA v. United States, 535 F.3d 132, 139 (3d Cir. 2008) (quoting U.S. ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir. 2007)). Because Defendants do not challenge the facts asserted in the Amended Complaint but, instead, focus on arguing that Plaintiffs' claims fail to satisfy jurisdictional requirements as a matter of law, Defendants have launched a facial attack on subject-matter jurisdiction.
Courts adjudicating facial attacks under Rule 12(b)(1) use the same standard of review as used for Rule 12(b)(6) motions to dismiss for failure to state a claim. Schuchardt v. President of the United States, 839 F.3d 336, 344 (3d Cir. 2016). Accordingly, the Court must determine whether the pleadings, on their face, adequately allege subject-matter jurisdiction. Constitution Party of Pennsylvania v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014). Courts must consider only "the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff." Id. The Court must accept all of a plaintiff's plausible allegations as true and draw all reasonable inferences in the plaintiff's favor. Id. at 343. However, "[c]onclusoryassertions of fact and legal conclusions are not entitled to the same presumption." Id. at 346-47.
Plaintiff, Lehigh Valley Properties ("LVP"), owns real property located at 901-933 N. Ivy Street in the City of Allentown ("Ivy Street Property"). Am. Compl. at ¶ 8. Plaintiffs, Dennis and Laurie Atiyeh, own real property located at 5828 Park Valley Road in Schnecksville ("Park Valley Property"). Am. Compl. at ¶ 7. Plaintiffs allege that Defendants have contended that Plaintiffs owe past due school taxes and that "Defendants are now seeking to collect penalties, interest and fees which are not taxes." Am. Compl. at ¶ 11. According to Plaintiffs, Defendant Portnoff Law Associates, LTD. ("Portnoff") was engaged as an "agent" by Defendants Parkland School District ("Parkland") and Northern Lehigh School District ("Northern Lehigh") for "collecting taxes at their behest and on their behalf." Am. Compl. at ¶ 10. Plaintiffs allege that in addition to actual taxes, Portnoff also adds penalties, interest and fees and seeks to collect those sums as additional taxes. Id. Plaintiffs allege that Defendants have refused and failed to respond to Plaintiffs' requests to "provide of the accuracy and validity of the alleged past due school taxes (which are not taxes but rather penalties, interest and fees)" and have "continually change[d] the amount allegedly owed," notwithstanding that Plaintiffs allegedly made a $48,000 payment. Am. Compl. at ¶ 12.
In Count One of their Amended Complaint, Plaintiffs allege that Defendants repeatedly levied school taxes upon the entire North Ivy Street Property owned by LVP and refused to reduce the assessed taxes on said property despite the fact that the City of Allentown has condemned approximately one-third of that property. Am. Compl. at ¶ 17. Plaintiffs allege that the taxes paid by them are evidenced by Exhibit 1 attached totheir complaint. Am. Compl. at ¶ 12. However, no such exhibit is attached to either the Amended Complaint or the original Complaint. Plaintiffs allege that Portnoff continually attempted to sell the North Ivy Street property through Sheriff sales in order to collect penalties, interest and attorney's fees that LVP had already paid and that Portnoff knew were incorrect. Am. Compl. at ¶¶ 18-19. In doing so, Portnoff allegedly acted as "agent and alter ego" of Parkland and allegedly acted with malice toward LVP by "singl[ing] out Plaintiff for 'special treatment'...without allowing for any due process under the United States Constitution." Am. Compl. at ¶¶ 20-21. Plaintiffs also allege that Portnoff, as agent and alter ego for Parkland, has scheduled Sheriff's sales of Plaintiffs' Park Valley Road property despite Plaintiffs' requests that they be supplied with an accurate accounting of the penalties, interest and attorney's fees levied and payments made. Am. Compl. at ¶¶ 28, 30. According to Plaintiffs, Portnoff "has failed to follow the proper procedures for collecting the school taxes and instead is now using the auspices of that law to collect penalties, interest and attorney's fees and had purposely ignored Plaintiffs (sic) requests for information." Am. Compl. at ¶ 31. Plaintiffs allege that Portnoff has violated Plaintiffs' constitutional rights by refusing to provide them with proof that the money collected was used to pay the Northern Lehigh school taxes and not for Portnoff's benefit. Am. Compl. at ¶ 33.
Plaintiffs further allege in Count One that Portnoff "inflates each school tax bill for its own gain . . . so that the only party that receives money is Portnoff" and that Plaintiffs have requested to enter into a payment plan to resolve unpaid penalties, interest and attorneys' fees but Portnoff has refused to do so. Am. Compl. at ¶¶ 36-37. Plaintiffs assert that Defendants' actions violated the Fourteenth Amendment by taking Plaintiffs'property without the proper due process and treating Plaintiffs unequally under the law. Am. Compl. at ¶¶ 23, 25. In their prayer for relief for Count One, Plaintiffs request an award of all "penalties, interest and attorney's fees incorrectly applied" and actual damages of more than $200,000 plus reasonable fees, costs and expenses with interest. Plaintiffs do not allege that a Sheriff's sale actually took place or that Plaintiffs were ever deprived of their Properties.
Count Two of the Amended Complaint asserts a civil RICO claim. Plaintiffs allege that Defendants "engaged in a pattern of illegal activities in the collection of penalties, interest and attorney's fees wherein Defendant Portnoff is improperly collecting school taxes from Plaintiffs and other [sic] and then failing to remit all money collected and instead applying that money to penalties, interest and attorney's fees." Am. Compl. at ¶ 42. Plaintiffs allege that Defendants' failing to remit Plaintiffs' school taxes, refusing to provide Plaintiffs with an "accounting of how the school taxes penalties, interest and attorney's fees were applied, blocking Plaintiffs from selling portions of their property and crops, refusing to allow Plaintiffs to enter into a payment plan and filing multiple court actions against Plaintiffs to harass and demean them constitutes a pattern of racketeering activity for the purpose of defrauding Plaintiffs. Am. Compl. at ¶ 44. Plaintiffs assert that pursuant to this allegedly fraudulent scheme, Defendants committed multiple related acts to defraud Plaintiffs and illegally seize their land without due process. Am. Compl. at ¶ 45. In their prayer for relief for Count Two, Plaintiffs seek treble damages, fees, costs "and an Order preventing Defendants from placing any of Plaintiffs' property for Sheriff's sale pending a true and accurate accounting of all sums received from Plaintiffs and a disposition of those funds."
In Count Three of the Amended Complaint, Plaintiffs claim that Defendants' actions have violated Plaintiffs' rights "under the Pennsylvania Constitution." See Am. Compl. at ¶¶ 49-52. Count Three incorporates by reference the allegations already set forth in the Amended Complaint. Am. Compl. at ¶ 49. Plaintiffs further allege that Defendants are "engaged in a pattern of harassment and illegal taking of Plaintiffs' property" and that Plaintiffs have been "greatly harmed ... in that their properties are now diminished in value." Am. Compl. at ¶¶ 51-52. In its prayer for relief, Count Three seeks "an award of all taxes incorrectly applied" and "actual damages in excess of $200,000" plus "Plaintiffs (sic) reasonable fees, costs and expenses together with interest."
The TIA provides that "[t]he district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State." 28 U.S.C. § 1341. The TIA is "first and foremost a vehicle to limit drastically federal court jurisdiction to interfere with so important a local concern" as taxation. Rosewell v. LaSalle Nat. Bank, 450 U.S. 503, 522, 101 S.Ct. 1221, 67 L.Ed.2d...
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