           IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Provision of Grace World                     :
Mission Church,                              :
                   Appellant                 :
                                             :
              v.                             :
                                             :    No. 1453 C.D. 2018
City of Philadelphia                         :    Argued: June 3, 2019



BEFORE:       HONORABLE ANNE E. COVEY, Judge
              HONORABLE CHRISTINE FIZZANO CANNON, Judge
              HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge



OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE FIZZANO CANNON                           FILED: June 28, 2019


              Provision of Grace World Mission Church (Owner) appeals from the
order of the Court of Common Pleas of Philadelphia County (trial court), dated July
2, 2018 and entered July 3, 2018, which sustained the preliminary objections of the
City of Philadelphia (City) in the nature of a demurrer and dismissed Owner’s
complaint with prejudice. Upon review, we affirm the dismissal on other grounds.1
              In March 2018, Owner filed a two-count complaint against the City
alleging the following facts. Owner is a religious organization exempt from federal
income tax and possessing a certificate of exemption from taxation by the
Commonwealth of Pennsylvania, Department of Revenue.                   Complaint ¶¶ 2-4.

       1
        An appellate court may affirm on other grounds where grounds for affirmance exist. FP
Willow Ridge Assocs., L.P. v. Allen Twp., 166 A.3d 487, 496 n.11 (Pa. Cmwlth. 2017).
Owner owns and uses a building located at 1950 West Rockland Street in
Philadelphia for its religious activities. Id. ¶ 2. The City operates a Department of
Revenue that assesses fees for water and sewer services in the City, including
services rendered to Owner. Id. ¶ 5. Owner has a City-issued water meter located
on its property that measures its use of the City’s water utilities. Id. ¶ 12. Owner
paid all charges owed to the City that it incurred as a result of its water use based on
the readings of the water meter located on the property. Id. ¶¶ 8 & 12.
             In 2009, the City announced a plan to begin assessing non-residential
properties, including Owner’s property, a stormwater management service charge
(Charge). Complaint ¶ 6. The Charge was to “fund a variety of activities” including
maintaining the City’s network of pipes and inlets that carry stormwater and
implementing restoration projects to reduce sewer overflows and pollutants in the
City’s streams and waterways. Id. Owner avers that the 2009 plan imposed a new
“parcel based” means of calculating the Charge based on the property’s gross area
plus the amount of its “impervious area.” Id. ¶ 9.
             Though the 2009 plan implemented the parcel-based means to calculate
the Charge, Owner alleges that the City did not measure according to the plan but
simply “assumed” each property’s impervious area to be a “percentage of the gross
area.” Complaint ¶ 10. Because the City does not base the Charge on any calculation
relating to use of the City’s stormwater drainage facilities or management system,
Owner avers that the Charge is, in reality, a tax that Owner, as a tax-exempt entity,
is not required to pay. Id. ¶¶ 11, 24 & 26. After the 2009 plan was implemented,
Owner continued to pay the use-based charges incurred, as reflected on the water
meter, but refused to pay the Charge. Id. ¶¶ 12-13.




                                           2
             Because Owner refused to pay the Charge, in 2014, the City sued
Owner in the trial court seeking to recover more than $16,000 in back charges,
interest and fines. Complaint ¶ 14. The matter went to arbitration, and an arbitration
panel entered an award in favor of Owner; the City did not appeal the decision,
rendering it final. Id. ¶ 16. Despite its unsuccessful effort to collect the Charge
against Owner, the City continued to assess Owner with the Charge. Id. ¶ 17. In
2017, without notice to Owner, the City entered a “water lien” against Owner’s
property in the amount of $26,433.89 and terminated Owner’s water service. Id. ¶¶
18 & 20. Owner alleges that by entering a lien against it, the City placed a cloud on
Owner’s title, thereby preventing Owner from obtaining financing needed to further
its “religious and charitable activities.” Id. ¶ 19. Owner continues to refuse to pay
the Charge. Id. ¶ 17.
             Based on these facts, Owner alleged, in its complaint, that the City
violated several provisions of the Pennsylvania Constitution by imposing the Charge
on Owner, a tax-exempt entity. Complaint ¶¶ 24, 26, 31-34. Owner further alleged
that the City violated its procedural due process rights by imposing a lien against
Owner’s property and terminating its water service without notice and/or an
opportunity to contest the Charge. Id. ¶¶ 37-38. Owner further asserted that there
is “no administrative forum with the authority” to provide it with the relief it seeks,
id. ¶ 36, including: (1) an award of damages; (2) a declaration that the Charge is a
tax; (3) an order requiring the City to remove, at its cost, the lien it imposed on
Owner’s property; (4) an order requiring the City to restore water service to Owner’s
property; (5) an order requiring the City to cease and desist from charging the “tax”
to Owner or attempting to collect it; and (6) an award of reasonable attorneys’ fees
and costs. Complaint, Prayer for Relief (a)-(f).


                                          3
             In response to Owner’s complaint, the City filed two preliminary
objections. First, the City objected by asserting that Owner failed to plead sufficient
facts to support its claims. Preliminary Objections Part A. The City contended that
Owner’s claims were “based upon the manner in which the City calculates” the
Charge. Preliminary Objections ¶ 19. Though Owner’s claims were based on the
manner of calculating the Charge, the City contended that Owner failed to identify
a legal source supporting how the City calculates the charge and failed to identify
the time period from which Owner’s claims stem. Id. ¶¶ 20-22.
             Second, the City objected to Owner’s Complaint in the nature of a
demurrer to Owner’s claims seeking declaratory judgment and alleging procedural
due process violations. Preliminary Objections Part B. The City asserted that Owner
made no allegations “concerning the actual methods by which the Charge has been
assessed since July 1, 2013, or any allegations as to the legal validity of this method,”
and, therefore, Owner failed to plead a cause of action related to the method by which
the Charge is assessed. Id. ¶ 32 & 34. The City argued that Owner’s claim for due
process violations must fail because Owner admitted, in its complaint, that it
received “continued notification” of the Charge on a monthly basis. Id. ¶ 36.
Though the City did not specifically raise an objection that Owner failed to exhaust
its administrative remedies, the City noted in its objections that Owner could have
filed a written appeal with the Philadelphia Water Department and then, if still
dissatisfied, could have had a hearing before the Tax Review Board on the matter.
Id. ¶ 45; see infra note 3.
             After review of the City’s preliminary objections, the trial court granted
them and dismissed Owner’s claims with prejudice. Trial Court Order dated 7/2/18.
Subsequently, the trial court issued an opinion wherein it explained that it properly


                                           4
sustained the City’s preliminary objections because Owner’s complaint fails to plead
essential facts as it fails to cite any “specific regulation, city code or statute” to
support its allegations that the City improperly calculated the Charge and Owner did
not identify the “time period” when it was improperly charged. Trial Court Opinion
dated 9/7/18 at 3-4. The trial court concluded that because Owner failed to include
these facts, the City does not have adequate notice of the time period from which
these claims arise and, therefore, cannot ascertain the extent of Owner’s claims to
prepare and submit evidence to dispute it. Id. at 4. The trial court further explained
that Owner’s claims were insufficient because Owner failed to plead facts or provide
exhibits that refer to and/or reflect the City’s method of calculation or why the City’s
calculations are inaccurate under any specific “code, regulation or statute.” Id. at 5.
Therefore, the trial court concluded that Owner cannot “set forth a basis for
recovery” and dismissed the complaint. Id. Owner brought this appeal.2
              On appeal, Owner asserts that the trial court erred by dismissing its
complaint because Owner pleaded sufficient facts to enable the City to prepare an
adequate defense. Owner’s Brief at 6-7. Owner contends that it identified a time
period, as it alleged that the City has improperly imposed the Charge from the
inception of the 2009 plan to the present. Id. at 7. Owner asserts that even if its
complaint lacked sufficient facts for the City to provide a proper defense, “the only
appropriate remedy here was to allow [Owner] an opportunity to cure by

       2
          When an appellate court rules on whether preliminary objections in the nature of a
demurrer were properly sustained, the standard of review is de novo and the scope of review is
plenary. Owens v. Lehigh Valley Hosp., 103 A.3d 859, 862, n.4 (Pa. Cmwlth. 2014). In ruling on
preliminary objections we accept as true all well-pleaded material allegations and any reasonable
inferences that we may draw from the averments. Highley v. Dep’t of Transp., 195 A.3d 1078,
1082 (Pa. Cmwlth. 2018). We may sustain preliminary objections only when the law makes clear
that the complainant cannot succeed on his claim, and we must resolve any doubt in favor of the
complainant. Id.

                                               5
amendment.” Id. Owner further contends that the City’s argument that Owner
incorrectly identified how the Charge is determined is a factual argument, not a legal
argument, and therefore is not properly raised as a demurrer. Id. Moreover, Owner
argues that the City’s argument does not control its claims for relief because Owner’s
argument is that the Charge is a tax and it pleaded facts in support. Id.
                Upon review, we affirm on other grounds, as the trial court properly
dismissed the complaint but should have dismissed it because Owner failed to
exhaust its administrative remedies.3 “[I]t is well-settled that a party may not seek
judicial resolution of a dispute until he or she has exhausted available administrative
remedies.” City of Philadelphia v. Lerner, 151 A.3d 1020, 1024 (Pa. 2016) (citing
Canonsburg Gen. Hosp. v. Dep’t of Health, 422 A.2d 141, 144 (Pa. 1980)). In its
complaint, Owner seeks a declaration that the Charge is a tax. Owner should have
brought its claims before the Tax Review Board4 for adjudication before seeking
judicial resolution of its dispute. The Tax Review Board has exclusive jurisdiction
over disputes involving “any tax, water or sewer rent, license fee or other charge”
resulting from “any decision or determination relating to the liability of any person
for any unpaid money” collectible by the Department of Revenue for or on behalf of
the City. Philadelphia Code § 19-17025 (emphasis added); Cherry v. City of

       3
         Although the City did not specifically object on the basis of failure to exhaust
administrative remedies before the trial court, the City has raised the issue before this Court. City’s
Brief at 13-14. But, regardless of whether the City raised the issue, the failure to exhaust
administrative remedies is jurisdictional in nature and, therefore, can be raised at any time either
by the parties or by the court sua sponte. See Pa.R.C.P. No. 1032; see also Brog v. Dep’t of Pub.
Welfare, 401 A.2d 613, 615 (Pa. Cmwlth. 1979).
       4
         The Tax Review Board is an administrative agency created pursuant to the authority of
the Philadelphia Home Rule Charter. Krug v. City of Philadelphia, 620 A.2d 46, 47, n.1 (Pa.
Cmwlth. 1993).
       5
           Section 19-1702(1) of the Philadelphia Code provides for “Petitions for Review” as
follows:
                                                  6
Philadelphia, 692 A.2d 1082, 1084 (Pa. 1997) (stating that the Tax Review Board
has exclusive jurisdiction over disputes concerning local tax liability in the City of
Philadelphia).
               Here, Owner did not pay the Charge based on its assertion that the
Charge is a tax, and in response, the City filed a lien against Owner in the amount of
$26,433.89 to collect the “unpaid money” resulting from the Charge. But, to
challenge the City’s determination of tax liability, Owner should have first petitioned
the Tax Review Board for a hearing and a decision as to whether the Charge is a tax
and whether Owner is liable for the unpaid Charge.6 Phila. Code §§ 19-1702(1), 19-
1701(3)(a) & (d); Krug, 620 A.2d at 47. If Owner received an adverse decision from
the Tax Review Board, then Owner could appeal that decision to the trial court and
seek the relief requested in the complaint. Phila. Code § 19-1706(2). Because the
Tax Review Board has “exclusive jurisdiction” over disputes involving taxes or
other charges, Owner cannot initially seek relief from the trial court, or this Court,
on the matters raised in its complaint. Cherry, 692 A.2d at 1084 (explaining that “a
party may not bring an action challenging the determination by a taxing authority of


               Every petition for review of any decision or determination relating
               to the liability of any person for any unpaid money or claim
               collectible by the Department of Revenue, for or on behalf of the
               City or the School District of Philadelphia, including, but not limited
               to, any tax, water or sewer rent, license fee or other charge, and
               interest and penalties thereon, shall be filed with the Tax Review
               Board within 60 days after the mailing of a notice of such decision
               or determination to the petitioner.

Phila. Code § 19-1702(1).
       6
         We note that a customer may also challenge the rates and charges on a water, sewer and/or
stormwater services bill by contacting the Public Water Department and filing an appeal to seek
an adjustment due to an (1) incorrect parcel, (2) inaccurate property classification, (3) inaccurate
gross area, (4) inaccurate impervious area, and (5) residential sideyard exemption. Public Water
Department Regulations § 304.3(a)(7)(i) (effective 7/10/15); Reproduced Record at 39a.
                                                 7
tax liability in a court of equity where the question is within the exclusive jurisdiction
of a non-judicial tribunal and administrative remedies have not been exhausted”);
Lilian v. Commonwealth of Pennsylvania, 354 A.2d 250, 252 (Pa. 1976) (explaining
that where an administrative remedy is statutorily prescribed, a court of equity or a
court of law is without jurisdiction to entertain the action); accord 42 Pa.C.S. §
7541(c)(2) (providing that declaratory relief is not available when the proceeding is
within the exclusive jurisdiction of a tribunal other than a court).
             Nevertheless, Owner asserts that it is not required to go before the Tax
Review Board with its claims because it raises a substantial constitutional question,
which is an exception to the exhaustion doctrine. Owner’s Reply Brief at 6-7.
Cherry, 692 A.2d at 1084 (citing Lynch v. Owen J. Roberts Sch. Dist., 244 A.2d 1
(Pa. 1968)) (a party need not exhaust administrative remedies, even where a statutory
remedy exists, in cases where the party challenges the constitutionality of the
enabling legislation). Owner asserts that the Charge is a “tax” on its face that applies
to all entities entitled to an exemption and that the City “mischaracterizes” the nature
of its challenge as an “as applied” constitutional challenge. Owner’s Reply Brief at
6. But, “the mere allegation or characterization of one’s claim as a constitutional
claim does not automatically allow a party to bypass administrative remedies.”
Cherry, 692 A.2d at 1084. Rather, what is required to “confer jurisdiction on an
equity court is the existence of a substantial question of constitutionality.” Id.
             To be deemed a substantial question of constitutionality, the challenge
must be to the validity of the statute, or here, the regulation, as a whole and not
simply a challenge to the application of the regulation to a particular party. Cherry,
692 A.2d at 1084. Owner is challenging the application of the Charge to its property
given Owner’s status as exempt. Complaint ¶ 24 (alleging that the Charge “as


                                            8
applied” to Owner is a tax). Thus, Owner does not raise a substantial question of
constitutionality.   “[W]here a party challenges merely the application of the
[regulation], the ‘administrative body which has responsibility for applying the
[regulation] on a day-to-day basis should have the first opportunity of studying and
ruling on any new application.’” Cherry, 692 A.2d at 1084 (quoting Rochester &
Pittsburgh Coal Co. v. Board of Assessment & Revision, 266 A.2d 78, 79 (Pa. 1970).
The Tax Review Board should have been given an opportunity to ascertain whether
the Charge is a tax and whether Owner is required to satisfy the lien reflecting unpaid
money owed as a result of the Charge before Owner brought its complaint to the trial
court.
             For the foregoing reasons, we affirm the trial court’s order dismissing
the complaint, but on other grounds, that is, because Owner failed to exhaust its
administrative remedies.



                                        __________________________________
                                        CHRISTINE FIZZANO CANNON, Judge




                                          9
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Provision of Grace World                :
Mission Church,                         :
                   Appellant            :
                                        :
            v.                          :
                                        :   No. 1453 C.D. 2018
City of Philadelphia                    :

                                     ORDER


            AND NOW, this 28th day of June, 2019, the order of the Philadelphia
Court of Common Pleas, dated July 2, 2018, is AFFIRMED on other grounds as
provided in the foregoing opinion.



                                      __________________________________
                                      CHRISTINE FIZZANO CANNON, Judge
