Martel v. Allegheny Cnty.

• Decision Date: 14 August 2019
• Docket Number: No. 568 C.D. 2018,568 C.D. 2018
• Citation: 216 A.3d 1165
• Parties: Joseph Nissim MARTEL and Ester Martel, husband and wife, on behalf of themselves and all others similarly situated, Appellants v. ALLEGHENY COUNTY, City of Pittsburgh, Pittsburgh Public Schools, and Allegheny County Board of Assessment Appeals and Review
• Court: Pennsylvania Commonwealth Court

216 A.3d 1165

Joseph Nissim MARTEL and Ester Martel, husband and wife, on behalf of themselves and all others similarly situated, Appellants

v.ALLEGHENY COUNTY, City of Pittsburgh, Pittsburgh Public Schools, and Allegheny County Board of Assessment Appeals and Review

No. 568 C.D. 2018

Commonwealth Court of Pennsylvania.

Argued: October 15, 2018

Filed: August 14, 2019

Edward B. Friedman and Adam T. Petrun, Pittsburgh, for Appellants.

Ira Weiss and Megan M. Turnbull, Pittsburgh, for Appellee Pittsburgh Public Schools.

BEFORE: HONORABLE P. KEVIN BROBSON, Judge, HONORABLE CHRISTINE FIZZANO CANNON, Judge, HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

OPINION BY JUDGE FIZZANO CANNON

Joseph Nissim Martel and Ester Martel, husband and wife, (the Martels) on behalf of themselves and all others similarly situated (Property Owners) appeal from the March 29, 2018 order of the Allegheny County Court of Common Pleas (trial court) dismissing their class action complaint in equity, seeking relief from property reassessments ordered by the Allegheny County Board of Assessment Appeals and Review (Board). The Board ordered the reassessments based on assessment appeals brought by the Pittsburgh Public Schools (School District), Allegheny County (County) and the City of Pittsburgh (City) (collectively, Taxing Authorities), where they introduced evidence of current market values to support their request for increased assessments. Property Owners contested the Taxing Authorities' power to bring the appeals and to rely on current market values, arguing that this conduct violated, in relevant part, laws enacted by Allegheny County pursuant to the Home Rule Charter and Optional Plans Law, 53 Pa.C.S. § 2964, and the Uniformity Clause of the Pennsylvania Constitution, Pa. Const. art. VIII, § 1. The Taxing Authorities and the Board raised several preliminary objections to the complaint and the trial court dismissed it for lack of legal sufficiency.¹ Upon review, we agree that the trial court properly dismissed the complaint; however, we affirm on another basis,² concluding that the trial court should have instead sustained the preliminary objections that Property Owners failed to exhaust the remedies available to them pursuant to the law known as the Second Class County Assessment Law (Assessment Law).³

On July 28, 2017, Property Owners filed a one-count class action complaint with the trial court alleging the following facts.⁴ Property Owners are individuals who own real estate in the County and include the Martels. Complaint ¶ 5. The County, which is a home rule municipality, has been under a base year assessment system since 2002. Id. ¶¶ 7 & 9. The last countywide reassessment was in 2012, which is the current established base year for the County. Id. ¶ 8.

On or about November 13, 2015, the Martels purchased their property located at 6340 Darlington Road, Pittsburgh, for the sum of $750,000. Complaint ¶ 24. At the time, the Martels' property had a base year (2012) assessed value of $464,700. Id. ¶ 26. On May 10, 2016, the School District initiated an appeal with the Board of the assessed value of the Martels' property for the 2016 tax year; though, at the time, "there had been no material additions or removal of improvements to the [Martels'] [p]roperty or physical changes in the land." Id. ¶¶ 25-26. At the hearing on the matter, the School District "stated that it was appealing the assessed value of the [Martels'] [p]roperty on the basis of current market value." Id. ¶ 28. After taking evidence, the hearing examiner recommended to the Board an order to change the assessed value of the Martels' property from $464,700 to $690,000, which the Board adopted. Id. ¶¶ 34 & 36. Property Owners contended that the Board erred by increasing the assessment on the Martels' property "based solely upon improperly submitted evidence of the sales price of the subject [p]roperty and other property sales that all took place after the base year." Id. ¶ 36. Property Owners appealed the Board's decision to the Allegheny County Court of Common Pleas Board of Viewers. Id. ¶ 37.

Property Owners allege that this matter is appropriately brought as a class action⁵ because the Taxing Authorities have initiated assessment appeals similar to the Martels' appeal on "approximately 200 or more" properties recently sold in Allegheny County, Complaint ¶ 44, and have accepted "the increased tax revenues associated with the same." Id. ¶ 17. Property Owners assert that the Taxing Authorities do not have the right to appeal the assessed values on the basis of current market value pursuant to Section 5-207.06(B)(7) of the Allegheny County Administrative Code (Administrative Code)⁶ and Board Rule IV, Section 3A (Board Rule).⁷ Complaint ¶¶ 13 & 15. In support, Property Owners explain that the Administrative Code provides that the Board is "precluded from increasing the base year assessment value of a property absent physical changes or improvements to the property," id. ¶ 14, and the Board Rule allows only the owners, not the Taxing Authorities, to "elect to use current fair market value in determining the assessed value of the subject property on appeal." Id. ¶ 16. Property Owners further allege that the County and the Board are outsourcing their duties to "conduct regular countywide reassessments to the ... [T]axing [A]uthorities" resulting in "de facto spot reassessments" and illegal taxation by changing the assessments through the appeal process in violation of the Uniformity Clause of the United States and Pennsylvania Constitutions, the Administrative Code, Board Rule, and other pertinent laws. Id. ¶¶ 18 & 19-22.

In their request for relief, Property Owners asked the trial court to: (1) enjoin the Taxing Authorities and the Board from appealing property tax assessments based on current fair market values and/or increasing the assessments where the appeal has not been initiated by taxpayers; (2) order the Board to "roll back" the assessed values of all affected properties to the 2012 base year valuation to provide prospective tax relief for "taxpayers" per the act known as the Refund Act, Act of May 21, 1943, P.L. 349, as amended , 72 P.S. §§ 5566b - 5566c ; (3) declare that the increased tax revenues collected have been "unlawfully obtained" and direct the Board to provide "written notice" to all affected taxpayers of their right to seek a refund within the applicable three-year period provided in 72 P.S. § 5566b, Section 1 of the Act of May 21, 1943, P.L. 349, as amended ; (4) direct the Board to promulgate reasonable rules and regulations regarding the tax refund procedure; (5) declare that the Taxing Authorities and the Board's improper conduct violates the Uniformity Clause, Administrative Code, Board Rule, and other pertinent law; (6) award Property Owners attorneys' fees and costs; and (7) provide any further relief as is "just and proper" under the circumstances. Complaint Wherefore Clause ¶¶ (a)-(g).

The Taxing Authorities and the Board responded to the Property Owners' complaint by each filing preliminary objections in the nature of a demurrer. The Board and the Taxing Authorities objected to the complaint arguing, inter alia , that Property Owners failed to exhaust their statutory remedies, as the Martels appealed the Board's reassessment to the Court of Common Pleas Board of Viewers and that case is ongoing. Board & School District's POs ¶¶ 5-6 & 53-54; County's POs ¶ 10 & City's POs ¶ 12. The Board and the School District also objected on the following grounds: (1) the Administrative Code and Board Rule relied upon by Property Owners violate the Consolidated County Assessment Law, 53 Pa.C.S. § 8855,⁸ and, therefore, cannot support their claim; (2) Property Owners' assertion of a "class" is baseless as the class is comprised of zero members; (3) a class action is not available for seeking tax refunds as a matter of law; and (4) Property Owners failed to join indispensable parties, i.e. , other school districts in the County, which could be affected by the decision in this matter. Board and School District's POs ¶¶ 15, 27, 46-47, 50, 62, 65 & 68. The County and City objected that Property Owners pled no specific facts showing that they commenced or participated in the assessment hearings. County's POs ¶ 7 & City's POs ¶ 8. The City made two additional objections: (1) the matter against it is not ripe as it "has done nothing" to Property Owners and (2) Property Owners fail to allege an actual harm as they still may succeed on their assessment appeal before the Court of Common Pleas Board of Viewers. City's POs ¶¶ 9 & 13.

Following briefing and oral argument on the preliminary objections, the trial court sustained, in part, and overruled, in part, the objections and dismissed the complaint.

Trial Court Order dated 3/29/18. The trial court dismissed the complaint by sustaining the Board and School District's objection that the Administrative Code and Board Rule relied upon by Property Owners, as written, violate state law and therefore their complaint is "legally insufficient." Id. at 5. In sustaining the Board and School District's objection, the trial court did not rely upon Section 8855 of the Consolidated County Assessment Law, as suggested by the Board and School District, to reach its conclusion. Instead, the trial court concluded that the Administrative Code and Board Rule violate Section 3107-C(h)(8) of the act known as the Second Class County Charter Law,⁹ Act of July 28, 1953, P.L. 723, as amended , added by the Act of May 20, 1997, P.L. 149, 16 P.S. § 6107-C(h)(8). Trial Court Opinion at 17.

The trial court explained that the Administrative Code and Board Rule allow only the taxpayer, not the Taxing Authorities, to elect to have the determination of value of a property during an assessment appeal based upon the current fair market value. Trial Court Opinion at 15. Because the Administrative Code and Board Rule restrict Taxing Authorities' rights during...