                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


6-10-2004

Gass v. Allegheny
Precedential or Non-Precedential: Precedential

Docket No. 03-2679




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"Gass v. Allegheny" (2004). 2004 Decisions. Paper 560.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/560


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                    PRECEDENTIAL                     *Lynn Corsello;
                                            Robinhill Development Company,
   UNITED STATES COURT OF                                        Appellants
APPEALS FOR THE THIRD CIRCUIT

                                          (*Per Amended Notice of Appeal filed
                                         6/12/03)
             No. 03-2679


                                            On Appeal from the United States
     HERBERT S. GASS, JR.;               District Court for the
   JOHN ZITELLI, an individual;              Western District of Pennsylvania
     DIANE ZITELLI, his wife;                  (D.C. Civil No. 02-cv-01394)
  JEFF CORSELLO, an individual;              District Judge: Hon. Joy F. Conti
    LYNN CORSELLO, his wife;
  MICHAEL LEAHY, an individual;
 DOMENIC DIPILATO, an individual;                Argued January 12, 2004
    ANNA DIPILATO, his wife;
ROBINHILL DEVELOPMENT                     Before: SLOVITER, RENDELL, and
    COMPANY                              ALDISERT, Circuit Judges

                   v.                             (Filed June 10, 2004)

 COUNTY OF ALLEGHENY,
PENNSYLVANIA;                            Robert A. Goldman (Argued)
    BOARD OF PROPERTY                    Pittsburgh, PA l5234
ASSESSMENT, APPEALS
AND REVIEW OF ALLEGHENY                        Attorney for Appellants
      COUNTY;
  KEVIN MCKEEGIN, an individual;         Charles P. McCullough
PATRICIA MCCULLOUGH, an                         County Solicitor
     individual;                         Caroline P. Liebenguth (Argued)
     JERRY SPEER, an individual;                Assistant County Solicitor
   JAM ES SKINZER, an individual;        Isobel Storch
  DEBORAH BARON, an individual;                 Solicitor
FREDERICK VALENCENTI, an                 Board of Property Assessment
       individual                        Office of Allegheny County Law
                                         Department
                                         Pittsburgh, PA l5219
   Herbert S. Gass, Jr.; John Zitelli;
    Diane Zitelli; *Jeff Corsello;             Attorneys for Appellees
                                                       regarding market values in making the
       OPINION OF THE COURT                            final assessments.
                                                               On August 9, 2002, Appellants filed
SLOVITER, Circuit Judge.
                                                       this action pursuant to 42 U.S.C. § 1983 in
                                                       the Western District of Pennsylvania
        Appellants, property-owning                    seeking a declaratory judgment that
taxpayers in Allegheny County, filed this              Appellees, the County of Allegheny, the
suit asserting that the Allegheny County               Board and individual Board members,1
Board of Property Assessment, Appeals                  violated their due process rights by
and Review (the Board) has adopted a                   encouraging hearing officers to seek out ex
policy, custom or practice in processing               parte evidence of market values and to
appeals from property tax assessments that             consider such evidence after the hearings,
violates their rights to due process. The              without affording the property owners
District Court dismissed this action for               notice or the opportunity to respond to the
lack of subject-matter jurisdiction because            new evidence. Appellants also claimed
of the Tax Injunction Act, 28 U.S.C. §                 that hearing officers made arbitrary and
1341. Because the Tax Injunction Act                   capricious recommendations to the Board
deprives federal courts of jurisdiction to             as to the assessed value of each of their
review challenges to a state property tax              properties.
system where the state provides a plain,
                                                               The Board moved to dismiss the
speedy and efficient remedy, we will
                                                       case on the ground that the Tax Injunction
affirm the decision of the District Court.
                                                       Act and principles of comity prevent
                       I.                              federal courts from exercising subject-
                                                       matter jurisdiction over a challenge to a
       Appellants, Herbert S. Gass, Jr.,
                                                       state tax system. Appellants responded
John and Diane Zitelli, Jeff and Lynn
                                                       that although the Tax Injunction Act bars
Corsello, Michael Leahy, Domenic and
                                                       federal jurisdiction over challenges to a
A n n a D i P i l a to , a n d R o b i n h i l l
                                                       state’s assessment, levy, or collection of
Development Company, appealed their
                                                       property taxes, it does not bar challenges
real property assessments in 2001 and
                                                       to a state’s post-payment appeals
2002 to the Board pursuant to the
                                                       procedures.
procedures set out in Section 207.01, et
seq. of the Administrative Code of                           The District Court referred the
Allegheny County. The Board’s hearing                  motion to dismiss to Magistrate Judge Ila
officers held appeals hearings for each of
the Appellants and made recommendations
                                                          1
to the Board for final resolution of their                The named Board members are Kevin
tax liability. Appellants allege that the              McKeegin, Patricia McCullough, Jerry
Board considered ex parte evidence                     Speer, James Skinzer, Deborah Baron, and
                                                       Frederick Valencenti.

                                                   2
Jeanne Sensenich for a Report and                   where a plain, speedy and efficient remedy
Recommendation (R&R).            Magistrate         may be had in the courts of such State.”
Judge Sensenich issued a thorough, well-            28 U.S.C. § 1341. Although the express
reasoned report recommending that the               language of the Tax Injunction Act only
District Court grant the Board’s motion to          refers to injunctive actions, the Supreme
dismiss for lack of subject-matter                  Court has held that the Tax Injunction Act
jurisdiction. She reasoned that if a federal        also prohibits federal courts from issuing
court could award damages or declare a              declaratory judgments holding state tax
state tax system unconstitutional, it could         laws unconstitutional. California v. Grace
halt the proper functioning of state                Brethren Church, 457 U.S. 393, 408
government in a manner that was                     (1982).
antithetical to principles of comity. Judge
                                                                         A.
Sensenich thus rejected Appellants’
asserted distinction between the taxing                     Appellants’ first argument is that
power and the appeals process. Finally,             the Tax Injunction Act does not apply
Judge Sensenich found that, in light of             because they have not asked the District
recent additions to Pennsylvania law,               Court to “enjoin, suspend or restrain the
Pennsylvania’s courts provide a “plain,             assessment, levy or collection of any tax.”
speedy, and efficient” remedy through the           Appellants’ Br. at 10 (quoting 28 U.S.C. §
process for appeal of tax assessments. The          1341). Appellants argue that they only
District Court adopted the R&R as the               challenge the post-collection appeals
opinion of the court and granted the                process, which does not implicate the
Board’s motion to dismiss for lack of               Commonwealth’s ability to assess, levy, or
jurisdiction.                                       collect taxes as described in the text of the
                                                    Tax Injunction Act.2
       On appeal, Appellants argue that 1)
the Tax Injunction Act does not apply to                   As noted above, Judge Sensenich
their challenge to Pennsylvania’s post-             rejected their attempt to distinguish their
payment appeals process; 2) even if the             challenge from the type of challenge
Tax Injunction Act applies to their case,           covered by the Act. She concluded that:
the federal courts still have jurisdiction
                                                           [appellants] ultimately []
because Appellants lack a plain, speedy
                                                           challenge the methods used
and efficient remedy at state law; and/or 3)
                                                           by the Board to assess
the Tax Injunction Act is unconstitutional.
                     II.
                                                      2
        The Tax Injunction Act provides                Although Appellants’ initial complaint
that “[t]he district courts shall not enjoin,       also requested damages, they clarified
suspend or restrain the assessment, levy or         during oral argument that they only seek
collection of any tax under State law               declaratory relief, the cost of the appeal
                                                    and attorneys’ fees.

                                                3
              property values (i.e.,               state law.
              the Board improperly
                                                           In determining whether the remedy
              considers ex parte
                                                   in Pennsylvania courts is “plain, speedy
              evidence regarding
                                                   and efficient,” we are guided by the
              market values after
                                                   Supreme Court's decision in Rosewell v.
              the appeal hearings
                                                   La Salle National Bank, 450 U.S. 503
              are concluded to
                                                   (1981).        In Rosewell, a taxpayer
              d e t e r m i n e
                                                   challenged Illinois’ real estate tax refund
              assessment values)
                                                   procedure, which required taxpayers to pay
              and not the appeal
                                                   the tax first and then attempt to contest the
              process itself. This
                                                   assessment and obtain a refund. The
              is exactly the type of
                                                   plaintiff in Rosewell refused to pay her tax
              claim contemplated
                                                   assessments because they were set at a
              b y C o n g r e ss in
                                                   “discriminatory level.” Id. at 518 n.22.
              enacting the Tax
                                                   The plaintiff filed a Section 1983 action
              Injunction Act . . . .
                                                   and the defendants moved to dismiss for
                                                   lack of jurisdiction. Because the Court
                                                   found at the outset that the Tax Injunction
App. at 15. We agree. The appeal process
                                                   Act “generally prohibits federal district
is directed to the Board’s ultimate goal and
                                                   cour ts fr om e njoining state ta x
responsibility of determining the proper
                                                   administration,” the Court focused on the
amount of tax to assess – a power of
                                                   question of whether Illinois provided an
“assessment” that explicitly falls within
                                                   adequate state remedy. Id. at 512.
the ambit of the Tax Injunction Act.
Appellants’ prior payment of the tax does                  In Rosewell, the Court construed
not change the fact that they seek to enjoin       “plain, speedy and efficient” to mean that
Pennsylvania’s finalization of assessments         a state court must meet “certain minimal
or re-assessments of taxes. Appellants’            procedural criteria,” but it did not require
attempt to distinguish the appeals process         that the state’s remedy be the best, most
from the tax assessment is unpersuasive.           convenient, or speediest one.            Id.
                                                   (emphasis in original); see also id. at 518-
                    B.
                                                   21 (stating that two-year delay in state
        The Tax Injunction Act divests             court, although regrettable, was not so
federal courts of jurisdiction only if the         egregious that it ran afoul of the Act’s
state fails to provide a “plain, speedy and        requirement of a “speedy” remedy).
efficient” remedy in its court. Appellants         Congress’ intent in requiring that the state
argue that the federal courts have                 provide a plain, speedy and efficient
jurisdiction over this case because                remedy was to ensure that the taxpayer be
Pennsylvania has failed to provide a               afforded “a full hearing and judicial
“plain, speedy and efficient” remedy at            determination of the controversy,” id. at

                                               4
513 (quoting testimony of Senator Bone,             Injunction Act and dismissed the case for
18 Cong. Rec. 1416 (1937)), and be able to          lack of subject-matter jurisdiction. Id. at
appeal to the United States Supreme Court,          68-71.
id. (quoting S. Rep. No. 1035, at 2 (1937)).
                                                           Shortly thereafter, we reaffirmed
        In light of the Supreme Court’s             the continued vitality of that conclusion in
reluctance “‘to interfere with the operation        Balazik v. County of Dauphin, 44 F.3d 209
of state tax systems,’” and desire to “‘be          (3d Cir. 1995), where we stated:
faithful to the congressional intent to limit
                                                           Upon review of the state law
drastically federal court interference with
                                                           canvassed in Behe, we see no need
state tax systems,’” we have stated that
                                                           to rehearse those findings here,
“we must construe narrowly the ‘plain,
                                                           other than to note that since that
speedy and efficient’ exception to the Tax
                                                           time [that Behe was decided] the
Injunction Act.” Sipe v. Amerada Hess
                                                           Pennsylvania Supreme Court has
Corp., 689 F.2d 396, 404 (3d Cir. 1982)
                                                           made it easier for taxpayers to
(quoting Grace Brethren Church,
                                                           b y p a s s e x i s t in g s t a tu t o r y
457 U.S. at 412, 413).                                     procedures and bring an action
                                                           directly in state court. We hold that
        We confronted a similar challenge
                                                           Pennsylvania provides a “plain,
to the one at bar in Behe v. Chester County
                                                           adequate and complete” remedy for
Board of Assessment Appeals, 952 F.2d
                                                           § 1983 plaintiffs challenging state
66 (3d Cir. 1991). Behe and other
                                                           taxation policies.
homeowners who claimed that Chester
County violated their constitutional rights         Id. at 218 (emphasis added). Critically,
by failing to revise property assessments           Appellants point to no subsequent case law
annually and causing differential tax               or legislation that suggests that
burdens between property taxes on newer             Pennsylvania has made it more difficult to
and older properties filed their suit in            bring an action challenging tax assessment
federal court pursuant to 42 U.S.C. § 1983.         schemes in state court.
They argued that the Tax Injunction Act
                                                            Other similarly-situated plaintiffs
did not divest the federal courts of
                                                    availed themselves of Pennsylvania’s court
jurisdiction because the Pennsylvania
                                                    system by filing an almost identical action
courts did not provide a “plain, speedy and
                                                    to the one before us in the Court of
efficient” remedy for their claim .
                                                    Common Pleas of Allegheny County. In
Following an examination of the relevant
                                                    2002, they filed a class action, challenging,
causes of action and procedures for
                                                    inter alia, the County’s alleged practice of
appealing tax assessments in Pennsylvania,
                                                    permitting and encouraging the Appeals
we concluded that Pennsylvania did
                                                    Board to use ex parte evidence after
provide a “plain, speedy, and efficient”
                                                    hearings in violation of their due process
remedy for the purposes of the Tax
                                                    rights.      Kowenhoven v. County of

                                                5
Allegheny, No. GD02-21763, slip op. at 1-          the action, agreeing that there was an
3 (Ct. Com. Pl. of Allegheny County July           adequate statutory remedy available.
10, 2003). The Board filed preliminary
                                                             However, its opinion included
objections, including a claim that an
                                                   language that was highly favorable to
adequate statutory remedy existed. The
                                                   Appellants, in that the court expressed
court sustained the Board’s objections and
                                                   concern that the Board’s internal
dismissed the suit because the plaintiffs
                                                   guidelines appeared to be inappropriate.
had “an adequate statutory remedy, namely
                                                   Id. at *2. On one hand, the Board sent a
the appeal to the common pleas court for a
                                                   memo to hearing officers and case
de novo hearing” on their assessment
                                                   reviewers directing that when making
disputes. Id. at 3; see also Murtagh v.
                                                   recommendations, “Hearing Officers and
County of Berks, 715 A.2d 548, 550-51
                                                   Case Reviewers are not to reappraise the
(Pa. Commw. Ct. 1998) (en banc) (citing
                                                   property or submit post-hearing evidence.”
Nat’l Private Truck Council, Inc. v. Okla.
                                                   Id. at *1 (quoting Allegheny County
Tax Comm’n, 515 U.S. 582 (1995))
                                                   Assessment Board Apr. 9, 2002 M emo to
(taxpayer may not maintain Section 1983
                                                   Hearing Officers and Case Reviewers)
action where state’s administrative process
                                                   (emphasis in original). On the other hand,
provides adequate remedy and taxpayer
                                                   the same memo also provided that “[a]
failed to exhaust administrative remedy);
                                                   Hearing Officer and Case Reviewer who
Jordan v. Fayette County Bd. of
                                                   has personal knowledge of an area or more
Assessment Appeals, 782 A.2d 642, 644
                                                   suitable sales comparables to those
(Pa. Commw. Ct. 2001) (en banc) (same).
                                                   introduced at a hearing may supply this
       Appellants here allege that they do         i n f o r m a ti o n for th e B o a r d ’s
not have an adequate remedy in state court         consideration.” Id. The Commonwealth
because the Court of Common Pleas of               Court characterized the latter practice as
Alleghe n y C ou nt y dismisse d th e              “inject[ing] an improper element into the
Kowenhoven action. At the time that                process of adjudication,” id. at *4, which
Appellants filed their briefs in this court,       “appears to fly in the face of procedural
the Kowenhoven plaintiffs’ appeal to the           due process notions, which require that
Commonwealth Court was still pending.              parties be afforded an opportunity to
They thus argued before us that the                confront the witnesses against them . . . .”
uncertainty of the pending appeal made the         Id. at *2; see also id. at *4 (plaintiffs may
availability of the state court remedy             “challenge any improperly considered
questionable or less than “plain.”                 evidence” and “improper evidentiary
However, since then, the Commonwealth              matters approved in the Board's memo are
Court issued its opinion in Kowenhoven v.          not permitted under the statute or the
County of Allegheny, 2004 WL 769711                constitution”). The Commonwealth Court
(Pa. Commw. Ct. Apr. 13, 2004). It                 further noted that if the plaintiffs filed a de
affirmed the trial court’s order dismissing        novo appeal asserting that the Board


                                               6
accepted and relied upon evidence not                        Board's policy memo results
permitted under the tax assessment statute,                  in a violation of their
the Board “will be required to reject that                   procedural due process
improperly considered evidence and base                      rights, or more simply to
a decision only upon evidence properly                       assert that the Board
offered to the hearing officer which [the                    committed an error of law
plaintiffs] had an opportunity to challenge,                 b y c o n s i d e ri n g s u c h
or such additional evidence that may be                      evidence.
then presented.” Id. at *4 (emphasis
                                                    Kowenhoven, 2004 WL 769711, at *4.
added).
                                                              Based on the above, we reject
           The Commonwealth Court rejected
                                                    Appellants’ argument that Pennsylvania
the argument made by the plaintiffs that
                                                    provides inadequate remedies. The Tax
they were entitled to pretermit the
                                                    Injunction Act does not require that the
administrative proceedings under Ward v.
                                                    state courts provide a favorable substantive
Village of Monroeville. 409 U.S. 57
                                                    outcome; instead, it only requires access to
(1972) (holding that plaintiff challenging
                                                    the state courts and an opportunity for
constitutionality of statute authorizing
                                                    meaningful review. Appellants’ failure to
quasi-judicial proceedings was entitled to
                                                    obtain relief in the state courts does not
due process in quasi-judicial hearing
                                                    impugn either the adequacy or the
beyond de novo appeal to trial court).
                                                    accessibility of the Commonwealth’s
However, the Commonwealth Court held
                                                    courts. And the Commonwealth Court’s
that beca use th e plain tiffs were
                                                    dicta regarding the impropriety of
c h a l le n g i n g the ap plic ation a n d
                                                    Allegheny County’s procedures suggests
interpretation of the assessment statute,
                                                    that the court agrees with many of
rather than its constitutionality, Ward did
                                                    Appellants’ objections, but nonetheless
not support their argument. Id. at *2-3;
                                                    requires that they pursue the appropriate
see also Jordan, 782 A.2d at 646 (holding
                                                    statutory and administrative remedies in
that attacks on the application of a statute,
                                                    asserting those grievances.                  In short,
rather than “frontal attacks” on a statute’s
                                                    P e n n s y l v a n i a ’ s r e q u i re m e n t t h at
constitutionality, do not trigger equity
                                                    d i s s a ti s f ie d t a x p a ye r s p u r s u e
jurisdiction and are appropriate for Board
                                                    administrative remedies for as-applied
review). The court thus concluded that
                                                    challenges does not imply that they are
       under the local rules                        without an adequate remedy.
       applicable in this case, [the
                                                          Indeed, the Second Class County
       plaintiffs] have th e
                                                    Assessment law creates a seven-member
       opportunity to claim in an
                                                    Board of Property Assessment, Appeals
       appeal to common pleas that
                                                    and Review “[i]n order to more efficiently
       the implementation of the
                                                    and equitably assess and value persons,
       process as enunciated in the

                                                7
property and subjects of taxation for                    such error by the board.
county purposes . . . .” 72 P.S. §§ 5452.1-
                                                  72 P.S. § 5020-505.1.
2. The Board is tasked with “hear[ing] all
cases of appeals from assessments, and all                Pennsylvania provides for adequate
complaints as to assessments, errors,             notice to taxpayers of the appeals
exonerations and refunds.” 72 P.S. §              procedures. General County Assessment
5452.4(c). The Assessment Board of                Law 72 P.S. § 5020-508 requires that the
Allegheny County also has promulgated             Board “give written or printed notice, at
procedures and practices for Appeals              least five days before the day of appeal, to
Hearings, including requirements that             every taxable inhabitant within the
hearing officers must provide reports with        respective” taxable area, along with “the
factual findings, conclusions of law, and         amount of the present assessment,
recommendations to the full Board.                valuation and ratio, the amount or sum of
Kowenhoven, 2004 WL 769711, at *1                 which he stands rated, and the rate per cent
(citing Allegheny County’s Admin. Code            of the tax, and of the time and place of
§ 207.07E).        The General County             such appeal.” The Board or its officers
Assessment Law provides further                   must further give notice, by advertisement
protections for dissatisfied taxpayers:           in one or more local newspapers, at least
                                                  three weeks before the day of appeal, of
       Whenever           through
                                                  the time and place fixed for the appeal. 72
       mathematical or clerical
                                                  P.S. § 5020-509. Real estate owners who
       error an assessment is made
                                                  feel aggrieved by an assessment of their
       more than it should have
                                                  real estate may appeal from the decision of
       been, and taxes are paid on
                                                  the Board of Property Assessment,
       such incorrect assessment,
                                                  Appeals and Review to the local Court of
       the county commissioners,
                                                  Common Pleas, and may further appeal to
       acting as a board of revision
                                                  the Superior or Supreme Court. 72 P.S. §§
       of taxes, or the board for the
                                                  5020-518.1-519. In short, Appellants have
       assessment and revision of
                                                  a fully-developed administrative and
       taxes, upon discovery of
                                                  judicial apparatus through which they may
       such error and correction of
                                                  grieve their claims. Because the state
       the assessment shall so
                                                  forum provides the procedural minimum
       inform the appropriate
                                                  required and “plainly” is accessible to
       taxing district or districts,
                                                  Appellants, the state court remedy is
       which shall make a refund
                                                  adequate.
       to the taxpayer or taxpayers
       for the period of the error or                    Appellants argue that if the federal
       six years, whichever is less,              courts were to assume jurisdiction of their
       from the date of application               claim, it would not upset the primary
       for refund or discovery of                 purpose of the Act: preventing out-of-


                                              8
state corporations from gaining unfair           their constitutional claims in state court. 3
advantages in litigation. It is true that this
                                                                      III.
court has previously suggested that one
purpose of the Tax Injunction Act was to                For the foregoing reasons, we will
“deprive out-of-state corporations of an         affirm the judgment of the District Court
advantage over state taxpayers in being          finding that it lacks subject-matter
able to threaten localities with protracted      jurisdiction to review Appellants’ claim.
injunctive litigation in federal courts which
induce[] the localities to compromise their
tax claims.” Robinson Protective Alarm
Co. v. City of Philadelphia, 581 F.2d 371,
375 (3d Cir. 1978).           However, the
Supreme Court in Rosewell did not accept
the notion that the above-stated concern
was the sole purpose of the Act. The
Court instead clarified that, “first and
foremost,” the Act was designed to
prohibit federal judicial interference with
local tax collection. Rosewell, 450 U.S. at
522 & n.29.          As such, we reject
Appellants’ interpretation of the legislative
intent of the Act.
                     C.
        Lastly, Appellants argue that the
Tax Injunction Act is unconstitutional to
the extent that it deprives them of a forum
to adjudicate their constitutional claims.
This argument is baseless. Because the
Tax Injunction Act only prohibits federal
jurisdiction where there is a “plain, speedy,
and efficient” remedy at state law, the Act
clearly provides for a forum in which
Appellants may grieve their alleged
deprivation. Where the state forum is
adequate, parties may assert their
constitutional claims in state court; where
the state forum is inadequate, parties may         3
                                                     Because the federal courts do not have
sue in federal court.          Because the       jurisdiction to review Appellants’ claim,
Pennsylvania state courts are open to            we need not address the substance of
Appellants, they may (continue to) pursue        Appellants’ claim regarding the use of ex
                                                 parte evidence during the appeals process.
