Smalis v. City of Pittsburgh Sch. Dist.

• Decision Date: 25 August 2016
• Docket Number: 16cv0693
• Citation: 556 B.R. 703
• Court: U.S. District Court — Western District of Pennsylvania
• Parties: Ernest Smalis, Appellant, v. City of Pittsburgh School District, Allegheny County Board of Property Assessment Appeals & Review, City of Pittsburgh Law Department and Allegheny County Law Department, Appellees.

556 B.R. 703

Ernest Smalis, Appellant,

v.City of Pittsburgh School District, Allegheny County Board of Property Assessment Appeals & Review, City of Pittsburgh Law Department and Allegheny County Law Department, Appellees.

16cv0693

United States District Court, W.D. Pennsylvania.

Signed August 25, 2016.

Ernest Smalis, Pittsburgh, PA, pro se.

M. J. Burkardt, Weiss Burkardt Kramer, David J. Montgomery, Montgomery Law Firm LLC, Adam S. Rosenthal, City of Pittsburgh Department of Law, Lee M. Dellecker, Allegheny County Law Department, Pittsburgh, PA, for Appellees.

ELECTRONICALLY FILED

Arthur J. Schwab

, United States District Judge

MEMORANDUM ORDER

Before the Court is an appeal from the United States Bankruptcy Court for the Western District of Pennsylvania filed by pro se Appellant, Ernest Smalis (hereafter, “Smalis”). See Doc. No.1. Smalis, the former spouse of Debtor Despina Smalis (hereafter, “Debtor”), initiated Adversary Action No. 15–2182 against the City of Pittsburgh School District, the Allegheny County Board of Property Assessment Appeals & Review, the City of Pittsburgh Law Department, and the Allegheny County Law Department (collectively, “Appellees”) for recoupment of certain real estate taxes and to redress the alleged violation of his federal due process rights. The Bankruptcy Court dismissed the adversary action on April 25, 2016 for lack of subject matter jurisdiction. Smalis then filed a motion for reconsideration, followed by a motion to strike the April 25 Order of dismissal. The Bankruptcy Court denied these motions on May 11 and May 19, 2016, respectively.

This appeal followed. For the reasons set forth below, this Court will affirm the April 25, May 11, and May 19, 2016 Orders of the Bankruptcy Court.

I. Jurisdiction and Standard of Review

This Court has jurisdiction over the instant appeal pursuant to 28 U.S.C. § 158(a)

. A district court sits as an appellate court in bankruptcy proceedings. In re Michael , 699 F.3d 305, 308 n. 2 (3d Cir.2012) ; see also

In re Professional Management , 285 F.3d 268 (3d Cir.2002) (a district court's jurisdiction is proper as an appeal of the final order of the bankruptcy court under 28 U.S.C. § 158(a) ).

On appeal from a final order entered by a bankruptcy court, the district court applies the following standards of review:

First, the court reviews a bankruptcy court's findings of fact under a “clearly erroneous” standard. See Am. Flint Glass Workers Union v. Anchor Resolution Corp. , 197 F.3d 76, 80 (3d Cir.1999)

. A factual finding is “clearly erroneous” if the reviewing court is “left with a definite and firm conviction that a mistake has been committed.” In re W.R. Grace & Co. , 729 F.3d 311, 319, n. 14 (3d Cir.2013) ; see also

Gordon v. Lewistown Hosp. , 423 F.3d 184, 201 (3d Cir.2005). Under this standard, the reviewing court must “accept ultimate factual determinations of the factfinder “unless that determination is either (1) completely devoid of minimum evidentiary support displaying some hue of credibility or (2) bears no rational relationship to the supportive evidentiary data.” DiFederico v. Rolm Co. , 201 F.3d 200, 208 (3d Cir.2000) (internal quotations and citations omitted).

Second, the court exercises plenary, or de novo , review over any legal conclusions reached by the bankruptcy court. In re Ruitenberg , 745 F.3d 647, 650 (3d Cir.2014)

; see also

Am. Flint Glass Workers , 197 F.3d at 80.

Third, if a bankruptcy court's decision is a mixed question of law and fact, the district court must break down the determination and apply the appropriate standard of review to each. In re Montgomery Ward Holding Corp. , 326 F.3d 383, 387 (3d Cir.2003)

. The court should “apply a clearly erroneous standard to integral facts, but exercise plenary review of the [bankruptcy] court's interpretation and application of those facts to legal precepts.” In re Nortel Networks, Inc. , 669 F.3d 128, 137 (3d Cir.2011) (citation omitted).

Fourth, a bankruptcy court's exercise of discretion is reviewed for abuse. In re Friedman's Inc. , 738 F.3d 547, 552 (3d Cir.2013)

. A bankruptcy court abuses its discretion when its ruling rests upon an error of law or a misapplication of law to the facts. In re O'Brien Environmental Energy, Inc. , 188 F.3d 116, 122 (3d Cir.1999).

II. Factual and Procedural History

Pertinent aspects of the underlying bankruptcy proceedings were aptly summarized as follows by the Bankruptcy Court in its April 25, 2016 Memorandum Opinion:

The above-captioned bankruptcy case was commenced by Despina Smalis on September 2, 2005, by the filing of a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. Within Debtor's Schedule A, she identified her interest in numerous properties, including 3224 Boulevard of the Allies, Pittsburgh, Pennsylvania (“Boulevard of the Allies Property”) and 4073 Liberty Avenue, Pittsburgh, Pennsylvania (“Liberty Avenue Property”).

On November 23, 2005 , the former Chapter 7 Trustee, Stanley G. Makoroff (“Trustee Makoroff”) commenced an adversary proceeding seeking to sell the Boulevard of the Allies Property. See Adv. No. 05–3308. In that proceeding, Mr. Smalis, a co-owner, was named as a defendant. Mr. Smalis filed an answer and actively participated in the proceeding, which ultimately culminated in the sale of the Boulevard of the Allies Property for the amount of $1,350,000. See Adv. No. 05–3308, Doc. No. 19. On August 8, 2006 , Trustee Makoroff filed a Report of Sale detailing, inter alia , the disbursements made at settlement for city, school, and county taxes as well as distributions to co-owners. See Adv. No. 05–3308, Doc. No. 23. The adversary proceeding has remained closed since 2006.

On March 6, 2006, an Order was entered granting Debtor a discharge under 11 U.S.C. § 727

. On September 25, 2006, Trustee Makoroff filed the Trustee's Final Report and Account of the Administration of the Estate and Final Application for Compensation. See Case No. 05–31587, Doc. No. 92. Therein, Trustee Makoroff designated property to be abandoned pursuant to 11 U.S.C. § 554(c), which included the Liberty Avenue Property. In the Notice of Filing of Final Account of Trustee Scheduling Hearing on Applications for Compensation, and Proposed Final Distribution Combined with Order Fixing Deadline for Filing Objections Thereto , notice was also provided that “[a]ny property not administered by the trustee will be deemed abandoned.” See Case No. 05–31587, Doc. Nos. 97 and 101 (showing service on Mr. Smalis). Thereafter, on November 2, 2006, Trustee Makoroff's proposed distribution was approved by the Court, which resulted in a surplus

being paid to the Debtor. The bankruptcy case was closed on March 28, 2007.

On the motion of the Commonwealth of Pennsylvania, Department of Environmental Protection (“DEP”), the case was reopened on October 30, 2008. Despite its reopening, the case remained inactive from that time until the filing of Mr. Smalis' Complaint to Determine Dischargeability on April 2, 2012. See Adv. No. 12–2140. A settlement was reached between Mr. Smalis and the Debtor, and Mr. Smalis consented to the dismissal of the adversary proceeding. As part of the settlement, the Debtor released her interest in the Liberty Avenue Property to Mr. Smalis.[ ] The adversary proceeding was closed following the settlement in November of 2012.[ ]

The [underlying adversary] proceeding was commenced by Mr. Smalis on September 10, 2015, seeking a determination of real estate tax liability and recoupment of funds resulting from alleged overpayment to the taxing bodies. Within his Complaint, Mr. Smalis specifically references two pieces of property, the Boulevard of the Allies Property and the Liberty Avenue Property. Based on this Court's extensive familiarity with this case and the record, on September 22, 2015, this Court entered an Order setting a hearing and advising that the Complaint may be dismissed at that time for the reasons set forth therein....

Doc. No. 1-10 at pp. 2-4 (internal footnotes omitted).

The instant adversarial proceeding arises from Smalis' complaint that, during the time period 2000 to 2009, while Smalis was serving a prison sentence, the relevant taxing authorities failed to send him assessment notices for the Boulevard of the Allies Property and the Liberty Avenue Property and thereby denied him an opportunity to challenge those assessments as provided by Pennsylvania law. (See Doc. No. 3 at p.10 of 28; see also Doc. Nos. 3–2 and 3–3. The record shows that, upon his release from prison in 2010, Smalis successfully challenged the assessment of the Liberty Avenue Property relative to tax year 2010. See Doc. 3-5. Smalis then attempted, unsuccessfully, to challenge the assessment for the years 2000 through 2009, nunc pro tunc. The Allegheny County Court of Common Pleas denied his request, and the Pennsylvania Commonwealth Court affirmed on the ground that Smalis had failed to act with reasonable diligence. See Smalis v. Allegheny Cty. Bd. of Prop. Assessment, No. 74 C.D. 2012, 2013 WL 3946234, at *3 (Pa.Commw.Ct. Feb. 22, 2013)

. The Pennsylvania Supreme Court subsequently denied allocatur. See

Smalis v. Allegheny Cty. Bd. of Prop. Assessment , No. 216 WAL (2013), 621 Pa. 691, 77 A.3d 638 (2013) (Table Case).

Smalis did not pursue his Pennsylvania action further by attempting to appeal the denial of allocatur to the United States Supreme Court. Instead, he filed a civil rights action in the United States District Court for the Western District of Pennsylvania in which he alleged that the taxing authorities violated his equal protection and due process rights by failing to give him notice of the tax assessments. See Smalis v. Allegheny Cty. Bd. of Property Assessment, Appeal & Review, et al . , Case No. 13–1646, 2014 WL 2039964 (W.D.Pa. May 16, 2014)

(unreported version appended to Smalis' Br. at Doc. No. 3-6). On consideration of the defendants' various motions to dismiss, Magistrate Judge Kelly dismissed the case for lack of subject...