Murtagh v. County of Berks

• Decision Date: 10 November 1993
• Citation: 535 Pa. 50,634 A.2d 179
• Parties: , 62 USLW 2319 Merry J. MURTAGH, Spencer Lee Cherashore, Frederick Murtagh et al., Appellants, v. COUNTY OF BERKS, et al., Appellees.
• Court: Pennsylvania Supreme Court

Page 179

634 A.2d 179

535 Pa. 50, 62 USLW 2319

Merry J. MURTAGH, Spencer Lee Cherashore, Frederick Murtagh

et al., Appellants,

v.

COUNTY OF BERKS, et al., Appellees.

Supreme Court of Pennsylvania.

Argued March 8, 1993.

Decided Nov. 10, 1993.

Richard D. Adamson, Adamson & Kennedy, Kutztown, Robert A. Swift, Denis F. Sheils, Kohn, Nast & Graf, P.C., Philadelphia, for appellants.

Stephen G. Rhoads, Montgomery, McCracken, Walker & Rhoads, Philadelphia, Daniel B. Huyett, E. Thomas Henefer, Stevens & Lee, Reading, Donald E. Wieand, Jr., Robert J. Hobaugh, Jr., Weaver, Mosebach, Piosa, Hixson & Marles, P.C., Allentown, Joseph C. Mossop, Frumkin, Shralow & Cerullo, Pottsville, David M. Kozloff, Kozloff, Diener, Payne & Fegley, Wyomissing, for appellees.

Before NIX, C.J., LARSEN, FLAHERTY, ZAPPALA, PAPADAKOS, CAPPY, and MONTEMURO, JJ.

FLAHERTY, Justice.

Merry J. Murtagh and other taxpayers appeal an order of Commonwealth Court reversing an order of the Court of Common Pleas of Berks County and remanding with instructions to dismiss the action for lack of subject matter jurisdiction. 144 Pa.Cmwlth. 624, 601 A.2d 1352. The trial court had concluded that it had subject matter jurisdiction over a class action brought by the taxpayers against the County of Berks and other local government units under 42 U.S.C. § 1983 ¹ challenging the constitutionality of the manner in which property is assessed for real estate tax purposes.

The taxpayers, representing a class of recent purchasers of real estate in Berks County, filed an amended complaint, after exhausting state administrative remedies, against the local governments. ² They asserted that the local governments had adopted a discriminatory "Welcome Stranger" policy. This policy results in the reassessment of recently purchased realty based on the purchase price while making no modifications in the assessment of comparable property not recently sold. ³ The taxpayers alleged that this practice violated their equal protection rights under the Fourteenth Amendment and, because the reassessments were done under color of state law, constituted a violation of 42 U.S.C. § 1983. ⁴

The local government defendants filed preliminary objections to the amended complaint based on, among other things, a lack of subject matter jurisdiction. The trial court dismissed both sets of preliminary objections, and certified the issue for appeal pursuant to Pa.R.A.P. 1311(b). Commonwealth Court granted separate petitions for permission to appeal the order, consolidated the appeals, and reversed.

The question presented is whether state courts must entertain section 1983 class actions challenging the constitutionality of a county's tax assessment procedure where plaintiffs have not exhausted state administrative and judicial remedies. The local governments contend that the trial court does not have subject matter jurisdiction over such a section 1983 action, arguing that state courts should follow the direction of the federal courts and refrain from entertaining such suits where there are plain, adequate and complete state administrative and judicial remedies. ⁵

Federal courts have routinely refrained from interfering with the administration of state taxes due to the Tax Injunction Act, 28 U.S.C. § 1341, and principles of comity. In Fair Assessment In Real Estate v. McNary, 454 U.S. 100, 102 S.Ct. 177, 70 L.Ed.2d 271 (1981), the Supreme Court of the United States ruled that actions for injunctive relief and monetary damages from a state property assessment procedure are barred in the federal courts by the principle of comity. That court said that comity concerns motivated congress to pass the Tax Injunction Act which prohibits a district court from enjoining, suspending or restraining 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. ⁶ 454 U.S. at 103, 102 S.Ct. at 179, 70 L.Ed.2d at 275. By enacting that statute, congress recognized that the autonomy and fiscal stability of states survive best when their tax systems are not subject to scrutiny in federal courts. 454 U.S. at 102-03, 102 S.Ct. at 179, 70 L.Ed.2d at 275. The Supreme Court of the United States also ruled that a similar action for monetary damages is likewise barred as long as the state provides for plain, adequate and complete remedies, because such actions are just as intrusive to the states' revenue collection systems as the actions for injunctive relief specifically barred under the Tax Injunction Act. 454 U.S. at 114-15, 102 S.Ct. at 185, 70 L.Ed.2d at 282. The court then stated that such taxpayers are to seek protection of their federal rights by state remedies provided that those remedies are plain, adequate, and complete and may ultimately seek review of the state decisions in the Supreme Court of the United States. 454 U.S. at 116, 102 S.Ct. at 186, 70 L.Ed.2d at 283. ⁷

State courts are not bound by Fair Assessment and its progeny. The Tax Injunction Act applies by its very terms to preclude federal courts, not state courts, from enjoining state tax schemes. Therefore there is no danger of federal court interference or misunderstanding. Likewise, abstention based on comity has no application when a section 1983 cause of action is brought in state courts because there is no risk of federal court interference. ⁸

The local governments nonetheless argue that the state courts should abstain from hearing section 1983 claims until the taxpayers have exhausted state administrative and judicial remedies. They appear to argue that section 1983 plaintiffs in state court should be no better off than section 1983 plaintiffs in federal court. Therefore, they should be required to exhaust the administrative and judicial remedies set forth in the Third Class County Assessment Law (TCCAL) ⁹ and in the General County Assessment Law (GCAL). ¹⁰ Under both schemes, a property owner who is aggrieved by any property tax assessment has a right to appeal to a board of assessment appeals, and then to the court of common pleas which is to proceed de novo. In light of the resolution of this case, we need not and do not decide here whether the state statutory remedies are plain, adequate and complete in the context of a section 1983 class action. ¹¹

The Supreme Court of the United States has consistently affirmed the duty of state courts to entertain section 1983 actions, except where a valid excuse exists, regardless of whether plaintiffs have exhausted state administrative and judicial remedies. Municipalities may be sued under section 1983 when a municipal policy, ordinance, regulation or custom inflicts constitutional injury. Monell v. New York City Department of Social Services, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). Since 1980, the Supreme Court of the United States has made clear that state courts have concurrent jurisdiction with federal courts to hear section 1983 claims. Maine v. Thiboutot, 448 U.S. 1, 100 S.Ct. 2502, 65 L.Ed.2d 555 (1980). When state courts entertain federal causes of action, the rights of, and the defenses to, a federal cause of action are defined by federal law so that the outcome of federal causes of action would be the same, regardless if decided in a state or federal forum. Howlett v. Rose, 496 U.S. 356, 375, 110 S.Ct. 2430, 2442, 110 L.Ed.2d 332, 353 (1990). ¹² Also, in the absence of a valid excuse, state courts have no discretion to decline to accept jurisdiction when the parties and controversy are properly before the state court. 496 U.S. at 369, 110 S.Ct. at 2439, 110 L.Ed.2d at 348.

A valid excuse may exist when a state court refuses jurisdiction because it has no competent court to hear the case or because of a neutral state rule of judicial administration, unless that rule is preempted by federal law. Felder v. Casey, 487 U.S. 131, 108 S.Ct. 2302, 101 L.Ed.2d 123 (1988). The requirement that a state court of competent jurisdiction treat federal law as the law of the land does not necessarily include within it a requirement that the state create a court competent to hear the case in which the federal claim is presented. Howlett, 496 U.S. at 372, 110 S.Ct. at 2441, 110 L.Ed.2d at 350-351. Neutral rules of judicial administration have included those authorizing dismissal of both federal and state claims where neither the plaintiff nor the defendant was a resident of the forum state, Douglas v. New York, N.H. & H.R. Co., 279 U.S. 377, 49 S.Ct. 355, 73 L.Ed. 747 (1929), where the cause of action arose outside of the court's territorial jurisdiction, Herb v. Pitcairn, 324 U.S. 117, 65 S.Ct. 459, 89 L.Ed. 789 (1945), or where the doctrine of forum non conveniens appropriately applied. Missouri ex rel. Southern R. Co. v. Mayfield, 340 U.S. 1, 71 S.Ct. 1, 95 L.Ed. 3 (1950).

Neutral state rules of judicial administration appear to be preempted in section 1983 cases, however, in situations where the plaintiff and defendant are residents of the forum state and the cause of action arises in the forum state. The Supreme Court of the United States has ruled that section 1983 plaintiffs are not required to exhaust state administrative remedies before instituting section 1983 suits in federal courts or state courts. See Patsy v. Board of Regents of Florida, 457 U.S. 496, 102 S.Ct. 2557, 73 L.Ed.2d 172 (1982) and Felder v. Casey, supra, respectively. In Felder, nine months after being allegedly beaten by Milwaukee police officers who arrested Felder on a disorderly conduct charge that was later dropped, Felder filed a state court action against the city and certain of the officers under section 1983. He alleged that the beating and arrest were racially motivated and violated his rights under the Fourth and Fourteenth Amendments to the United States Constitution. The officers moved to dismiss the suit because of Felder's failure to comply with Wisconsin's notice-of-claim statute. The statute...