         IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Greenwood Gaming and            :
Entertainment, Inc.,            :
                                :
                     Petitioner :
                                :
                v.              : No. 609 F.R. 2015
                                : Submitted: July 27, 2018
Commonwealth of Pennsylvania,   :
                                :
                     Respondent :


BEFORE:     HONORABLE P. KEVIN BROBSON, Judge
            HONORABLE MICHAEL H. WOJCIK, Judge
            HONORABLE ELLEN CEISLER, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE WOJCIK                                     FILED: September 6, 2018

            Before the Court is the application for summary relief filed by the
Commonwealth of Pennsylvania (Commonwealth), Department of Revenue
(Department) to the petition for review filed in our appellate jurisdiction by
Greenwood Gaming and Entertainment, Inc. (Taxpayer) seeking review of the order
of the Board of Finance and Revenue (F&R) that denied Taxpayer’s request for a
refund of slot machine taxes. We grant the application and affirm F&R’s order.
            The stipulated facts are as follows.     Taxpayer is a Pennsylvania
corporation that operates Parx Casino and Racetrack (Casino) pursuant to a Category
1 slot machine license and table game operation certificate issued by the
Pennsylvania Gaming Control Board (Gaming Board). Taxpayer is subject to the
provisions of the Pennsylvania Racehorse Development and Gaming Act (Gaming
Act)1 including those governing the calculation of gross terminal revenue (GTR)2 for
purposes of calculating the slot machine taxes due.3 The amounts at issue in the case

       1
           4 Pa. C.S. §§1101-1904.

       2
           Section 1103 of the Gaming Act defines GTR as follows:

                The total of:

                (1) cash or cash equivalent wagers received by a slot machine minus
                the total of:

                        (i) Cash or cash equivalents paid out to players as a result of
                        playing a slot machine, whether paid manually or paid out
                        by the slot machine.

                        (ii) Cash or cash equivalents paid to purchase annuities to
                        fund prizes payable to players over a period of time as a
                        result of playing a slot machine.

                        (iii) Any personal property distributed to a player as a result
                        of playing a slot machine. This does not include travel
                        expenses, food, refreshments, lodging or services.

                (2) cash received as entry fees for slot machine contests or slot
                machine tournaments.

                The term does not include counterfeit cash or tokens; coins or
                currency of other countries received in slot machines, except to the
                extent that the coins or currency are readily convertible to cash; or
                cash taken in a fraudulent act perpetrated against a slot machine
                licensee for which the licensee is not reimbursed.

4 Pa. C.S. §1103.

       In turn, Section 1103 defines “slot machine,” in pertinent part, as follows:

                Any mechanical, electrical or computerized contrivance, terminal,
                machine or other device approved by the [Board] which, upon
                insertion of a coin, bill, ticket, token or similar object therein or upon


                                                    2
                payment of any consideration whatsoever, . . . is available to play or
                operate, the play or operation of which, whether by reason of skill
                or application of the element of chance or both:

                (A) May deliver or entitle the person or persons playing or operating
                the contrivance, terminal, machine or other device to receive cash,
                billets, tickets, tokens or electronic credits to be exchanged for cash
                or to receive merchandise or anything of value whatsoever, whether
                the payoff is made automatically from the machine or manually.

                (B) May utilize spinning reels or video displays or both.

                (C) May or may not dispense coins, tickets or tokens to winning
                patrons.

                (D) May use an electronic credit system for receiving wagers and
                making payouts.

Id.

      3
          As this Court has explained, in relevant part:

                In casinos operated in . . . Pennsylvania, . . . the [Department] has
                installed a central control computer system that provides
                information to the Department about various financial events that
                occur during the operation of slot machines. According to the
                Department’s regulations, the determination of GTR and the
                calculation of taxes and other assessments due to the Department
                based upon slot machine play are determined based on the actual
                calculations made by the CCS. The [Gaming Act] provides for
                several deductions from GTR, i.e., for awards such as cash or cash
                equivalents paid out to patrons, cash paid to purchase annuities to
                fund prizes, and any personal property, all of which are measured
                by the CCS. The CCS, however, only measures for the deduction
                of those payments made to patrons which are made within the
                algorithm of the slot machine, which results from a patron’s physical
                operation of the slot machine. [Taxpayer] has requested that cash
                and non-cash prizes that it distributed to casino patrons . . . , but that
                were not recorded by the CCS, such as promotional items it
                distributes to patrons who hold Players Cards, be included as
                allowable deductions.


                                                    3
sub judice relate to distributions by Taxpayer to patrons that were not accounted for
by the Department’s central control computer system (CCS)4 and were not deducted
from the GTR on which Taxpayer paid its slot machine taxes.


                                                 ***

                         The prizes [Taxpayer] seeks to deduct from GTR were
                 distributed to patrons who are said to have won the prizes at issue in
                 one of the following ways: 1) by having their Players Card inserted
                 into a slot machine during a designated period or at a designated
                 time; 2) by having entries deposited in and selected from a drawing
                 drum by a computer using a random number generator; 3) by
                 bringing to a specific place at the casino, usually the Players’
                 Services Desk, a postcard or other mailer the casino had sent to a
                 patron; or 4) by being a specific patron receiving them as part of
                 what the casino would refer to as player development. [Taxpayer]
                 sought a refund of slot machine tax and local assessment fees under
                 the Gaming Act [collected in 2007 and 2008], and filed a petition
                 for review with the Department’s Board of Appeals. The Board of
                 Appeals denied [Taxpayer’s] petition . . . , finding that the refund
                 sought was not the direct result of a metered win from playing a slot
                 machine. [Taxpayer] timely appealed to [F&R] which denied its
                 appeal.

Greenwood Gaming and Entertainment, Inc. v. Commonwealth, 29 A.3d 1215, 1216-17 (Pa.
Cmwlth. 2011) (Greenwood I), exceptions overruled, 45 A.3d 455 (Pa. Cmwlth. 2012) (en banc),
rev’d sub nom. Greenwood Gaming and Entertainment, Inc. v. Department of Revenue, 90 A.3d
699 (Pa. 2014) (Greenwood II) (footnotes omitted).

       4
           Section 1103 defines “Central control computer,” in relevant part, as follows:

                 A central site computer controlled by the [Department] and
                 accessible by the [Gaming Board] to which all slot machines
                 communicate for the purpose of auditing capacity, real-time
                 information retrieval of the details of any financial event that occurs
                 in the operation of a slot machine, including, but not limited to, coin
                 in, coin out, ticket in, ticket out, jackpots, machine door openings
                 and power failure, and remote machine activation and disabling of
                 slot machines.


                                                   4
              In February 2009, Taxpayer filed a refund request with the
Department’s Board of Appeals challenging the Department’s calculation of the
GTR tax paid for the years 2007 and 2008 for awards given as promotions. Taxpayer
argued that the Department incorrectly excluded deductions from the GTR for prizes
awarded outside the algorithm of the slot machines. The Board of Appeals denied
the refund request and F&R denied Taxpayer’s appeal. This Court affirmed F&R’s
order and overruled Taxpayer’s exceptions, Greenwood I, but the Supreme Court
reversed our holding with respect to the deductions from the GTR on further appeal
and remanded for further consistent proceedings. Greenwood II.
              On June 18, 2014, Taxpayer filed a petition with the Board of Appeals
for the refund of an overpayment of $1,122,654.89 in taxes paid during the period
of January 1, 2009, through January 4, 2011. The Board of Appeals dismissed the
refund request, and F&R denied a subsequent appeal based on Taxpayer’s failure to
file the request “within three years of actual payment of the tax” as required by
Section 3003.1(a) of the Tax Reform Code of 1971 (Tax Code).5




4 Pa. C.S. §1103.

       5
        Act of March 4, 1971, P.L. 6, as amended, added by the Act of July 1, 1985, P.L. 78, 72
P.S. §10003.1. Section 3003.1(a) states:

               (a) For a tax collected by the [Department], a taxpayer who has
              actually paid tax, interest or penalty to the Commonwealth or to an
              agent or licensee of the Commonwealth authorized to collect taxes
              may petition the [Department] for refund or credit of the tax, interest
              or penalty. Except as otherwise provided by statute, a petition for
              refund must be made to the department within three years of actual
              payment of the tax, interest or penalty.


                                                5
               Taxpayer filed a petition for review in this Court, arguing that the
imposition of the three-year limitations period on its latest refund request violates its
due process rights and that it is inequitable to apply the statutory three-year period
in this case. In essence, Taxpayer alleges that this Court’s opinion in Greenwood I
was the controlling law during that three-year period so it would have been futile
and improper to seek a refund from the Department’s Board of Appeals during that
time. Taxpayer contends that such a refund request could have only been filed after
the Supreme Court issued its opinion in Greenwood II in 2014 reversing our order.
Taxpayer acknowledges the case law that precludes the application of equitable
considerations in tax refund cases, but asks this Court to reconsider these decisions
and to change and/or clarify the law to authorize such equitable considerations. The
Commonwealth then filed the instant application for summary relief,6 asserting that
the Board of Appeals was without jurisdiction to entertain Taxpayer’s refund request
as a matter of law because Taxpayer failed to file the request within the required
three-year period and that F&R properly affirmed its order.
               As the Supreme Court has explained:

               “[A] voluntary payment of taxes can be subsequently
               recovered by a taxpayer only as a statute provides.”
               Calvert [Distillers Corp. v. Bd. of Fin. & Revenue, 103
               A.2d 668, 669 (Pa. 1954)]; Philadelphia Gas Works ex rel.
               City of Philadelphia v. Com., 741 A.2d 841, 846 (Pa.
               Cmwlth. 1999), aff’d, [757 A.2d 360 (Pa. 2000)] (refund

       6
          Rule 1532(b) of the Pennsylvania Rules of Appellate Procedure states, “At any time after
the filing of a petition for review in an appellate or original jurisdiction matter the court may on
application enter judgment if the right of the applicant thereto is clear.” Pa. R.A.P. 1532(b). “An
application for summary relief is to be granted only if there are no material factual disputes and
the movant’s entitlement to relief is clear. In the determination, the factual averments and the
existing record are assessed in the light most favorable to the nonmoving party.” Northwestern
Youth Services, Inc. v. Department of Public Welfare, 66 A.3d 301, 309 n.11 (Pa. 2013) (citations
omitted).
                                                 6
               of voluntarily paid tax is matter of legislative grace).
               Where, as here, a statute provides a remedy, the directions
               of the statute must be strictly pursued to obtain the remedy.
               1 Pa. C.S. §1504. The time limitation in a tax statute must
               be “strictly enforced to prevent any uncertainty in the
               budgetary planning and fiscal affairs of the
               Commonwealth.” Philadelphia Gas Works, 741 A.2d at
               846; Fed. Deposit Ins. Corp. v. Bd. of Fin. & Revenue, [84
               A.2d 495, 498 (Pa. 1951)] (“[N]o doubt the legislature
               considered that to allow refunds [years after tax was paid]
               would create great uncertainty in the budgetary planning
               and fiscal affairs of the Commonwealth.”). Compliance
               with the time limitation in the Tax Code is “an absolute
               condition to obtaining a refund.” Id. See also Bethlehem
               Steel Co. v. Bd. of Fin. & Revenue, [244 A.2d 767 (Pa.
               1968)] (“Equitable principles cannot vary the statutory
               requirement and we lack the power to alter the explicit
               language of the statute.”).
Mission Funding Alpha v. Commonwealth, 173 A.3d 748, 762-63 (Pa. 2017).
               Based on the foregoing, it is clear that the Department’s Board of
Appeals did not err in dismissing Taxpayer’s refund request that was not submitted
“within three years of actual payment of the tax” as required by Section 3003.1(a)
of the Tax Code, and F&R did not err in denying Taxpayer’s appeal. Taxpayer’s
failure to file a refund request within the mandatory three-year period extinguished
its right to such a refund and neither the Department nor this Court may rely on
equitable principles to revive its statutory right to request a refund.7 Moreover, with

       7
         See, e.g., Lopresti v. Workers’ Compensation Appeal Board (Taylor Wharton Co.), 692
A.2d 629, 631 (Pa. Cmwlth.), appeal denied, 701 A.2d 580 (Pa. 1997) (“Claimant contends that
the 500-week statute of repose [for filing a petition to reinstate benefits] had not expired because
the time period during the pendency of his successful appeal to this Court, a period of one year,
nine months, and six days, should be excluded from the running of the statute of repose. In making
this argument, Claimant does not cite any cases to support the proposition that the pendency of an
appeal tolls the statute of repose upon another action. Nor has this Court’s research uncovered any
such cases. Furthermore, because Claimant has offered no evidence to establish that Employer
should be estopped from asserting the 500-week statute of repose, the only defense available to


                                                 7
respect to Taxpayer’s due process claim, “[b]ecause it is a statute of repose,
taxpayers’ rights to a refund are extinguished and once quashed, due process
demands nothing because there are no rights to ‘process.’”                        DaimlerChrysler
Corporation v. Commonwealth, 885 A.2d 117, 121 (Pa. Cmwlth. 2005), aff’d, 927
A.2d 201 (Pa. 2007) (citation and footnote omitted).8


Claimant, the statute of repose was not tolled by the pendency of a related appeal before this
Court.”).

       8
        Taxpayer’s reliance on the concurring opinions of Chief Justice Saylor and Senior Judge
Leadbetter in DaimlerChrysler Corporation does not support its claim of a due process violation.
As the Chief Justice explained:

                        In the present case, it seems clear that [the automobile seller]
               could not sustain a facial due process challenge to Section 3003.1(a).
               In this regard, the United States Supreme Court has recognized the
               need for reasonable procedural limitations applicable to tax refund
               claims—including “relatively short statutes of limitation”—as a
               means of insuring financial security in relation to state tax schemes.
               McKesson Corporation v. Division of Alcoholic Beverages and
               Tobacco, Department of Business Regulation of Florida, 496 U.S.
               18, 45 [(1990)] (stating, in dicta, that enforcement of fairly short
               limitation periods for tax refund claims is a constitutionally valid
               means of securing a state’s interest in fiscal stability). Thus, the
               statute is plainly constitutional at least with regard to those
               categories of claims for which the statute provides a reasonable
               opportunity to obtain a refund.

927 A.2d at 204 (Saylor, J., concurring). Chief Justice Saylor recognized the facial
constitutionality of Section 3003.1(a) in cases such as this case where the taxpayer was aware of
the tax liability and had the ability to request a refund during the relevant three-year statutory
period. Id. He expressed his concern in DaimlerChrysler Corporation as limited “to the
repurchases [by the automobile seller as required by the Pennsylvania Automobile Lemon Law
(Lemon Law), Act of March 28, 1994, P.L. 150, as amended, 73 P.S. §§1951-1963,] that occurred
after the expiration of the three-year period as to which there is at least the possibility that [the
seller] lacked a reasonable opportunity to obtain a refund [of the sales tax paid at the time of
purchase].” Id.



                                                  8
                Finally, Taxpayer’s assertion that filing a timely refund in the instant
matter would have subjected it to liability under those sections of the Judicial Code
commonly referred to as the Dragonetti Act9 is specious. By prosecuting the appeals
of the Department’s prior denial of its refund request in Greenwood I and
Greenwood II, Taxpayer demonstrated its reasonable belief that the Department
incorrectly excluded the asserted deductions from the GTR in calculating its tax
liability. Such reasonable belief provided Taxpayer with probable cause to file a
timely refund request in this case during the pendency of those appeals and such a
filing would not support any such liability. See Section 8352(1) of the Dragonetti
Act, 42 Pa. C.S. §8352(1) (“A person who takes part in the . . . initiation . . . of civil
proceedings against another has probable cause for doing so if he reasonably
believes in the existence of the facts upon which the claim is based, and . . .
reasonably believes that under those facts the claim may be valid under the existing
or developing law[.]”); Restatement (Second) of Torts §676 (Am. Law Inst. 1977)
(“To subject a person to liability for wrongful civil proceedings, the proceedings
must have been initiated . . . primarily for a purpose other than that of securing the
proper adjudication of the claim on which they are based.”); id., cmt. c (“One may
believe that his claim is meritorious even though he knows that the decisions in the
state do not sustain it if he believes that the law is potentially subject to modification


        Likewise, Senior Judge Leadbetter acknowledged the facial constitutionality of Section
3003.1(a) in a case such as this, yet “believe[d] the application of the three-year statute of repose
in the Lemon Law result[ed] in an unintended and inequitable consequence, but this result must
be addressed by the General Assembly, [and] not this Court.” 885 A.2d at 122 (Leadbetter, J.,
concurring). She concluded that, as in this case, “[b]ecause the three-year limitation on filing
refund requests is, on its face, both crystal clear and reasonable, this Court must affirm the orders
of [F&R].” Id.

       9
           42 Pa. C.S. §§8351-8355.
                                                 9
and that this case may be a suitable vehicle for producing further development or
change.”).
             Accordingly, we grant the application for summary relief and affirm
F&R’s order.




                                       MICHAEL H. WOJCIK, Judge




Judge Fizzano Cannon did not participate in the result of the decision in this case.




                                         10
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Greenwood Gaming and            :
Entertainment, Inc.,            :
                                :
                     Petitioner :
                                :
                v.              : No. 609 F.R. 2015
                                :
Commonwealth of Pennsylvania,   :
                                :
                     Respondent :


                                    ORDER


             AND NOW, this 6th day of September, 2018, the Commonwealth of
Pennsylvania’s application for summary relief is GRANTED, and the Board of
Finance and Revenue’s order is AFFIRMED. Unless exceptions are filed within
thirty (30) days pursuant to Pa. R.A.P. 1571(i), this Order shall become final.




                                       __________________________________
                                       MICHAEL H. WOJCIK, Judge
        IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Greenwood Gaming and                    :
Entertainment, Inc.,                    :
                         Petitioner     :
                                        :
            v.                          :   No. 609 F.R. 2015
                                        :   Submitted: July 27, 2018
Commonwealth of Pennsylvania,           :
                     Respondent         :


BEFORE: HONORABLE P. KEVIN BROBSON, Judge
        HONORABLE MICHAEL H. WOJCIK, Judge
        HONORABLE ELLEN CEISLER, Judge


OPINION NOT REPORTED


CONCURRING OPINION
BY JUDGE BROBSON                            FILED: September 6, 2018


            I join in the majority’s well-reasoned opinion. In doing so, I recognize
that our decision allows the Commonwealth to keep money that Petitioner
Greenwood Gaming and Entertainment, Inc. (Taxpayer) paid to the Commonwealth
under protest, while its appeal of the methodology that the Commonwealth used to
calculate the amount of slot machine tax due made its way through the courts.
Accordingly, I would hardly consider what Taxpayer paid to the Commonwealth for
tax years 2009 and 2010 a “voluntary payment of taxes.” See Maj. Op. at 7 (quoting
Mission Funding Alpha v. Commonwealth, 173 A.3d 748 (Pa. 2017)). In Greenwood
Gaming and Entertainment, Inc. v. Department of Revenue, 90 A.3d 699 (Pa. 2014)
(Greenwood Gaming I), the Pennsylvania Supreme Court vindicated Taxpayer’s
legal argument and remanded the matter for recalculation of the slot machine tax due
for the 2007 and 2008 tax years. The issue before the Court is whether that decision,
by itself, entitled Taxpayer to a recalculation or refund of the taxes paid in
subsequent years under protest.
             I have reviewed Taxpayer’s 2009 refund petition, which was the
initiating document in Greenwood Gaming I. It is clear that the 2009 refund petition
sought relief only with respect to the 2007 and 2008 tax years. Taxpayer argues,
nonetheless, that its 2009 refund petition should be construed as raising and
preserving a refund request for all years thereafter based on the same legal challenge
to the Commonwealth’s methodology. This Court heard a similar argument recently
in Starwood Airport Realty v. School District of Philadelphia, 115 A.3d 410 (Pa.
Cmwlth. 2015). There, we agreed with a taxpayer that the taxpayer’s property
assessment appeal for the 2012 tax year operated as an automatic appeal of
the 2013 and 2014 tax year assessments under Section 518.1(b) of The General
County Assessment Law,1 which provides, in relevant part:
                    If a taxpayer has filed an appeal from an assessment,
             so long as the appeal is pending before the board or before
             a court on appeal from the determination of the board, as
             provided by statute, the appeal will also be taken as an
             appeal by the taxpayer on the subject property for any
             valuation for any assessment subsequent to the filing of
             such appeal with the board and prior to the determination
             of the appeal by the board or the court. This provision
             shall be applicable to all pending appeals as well as future
             appeals.




      1
       Act of May 22, 1933, P.L. 853, added by the Act of December 28, 1955, P.L. 917, as
amended, 72 P.S. § 5020-518.1(b).


                                        PKB-2
(Emphasis added.)       The General Assembly, however, did not include similar
automatic appeal language in Section 3003.1(a) of Tax Reform Code of 1971
(Tax Code).2
              I must agree with the majority that Taxpayer’s remedy for subsequent
tax years was a timely refund petition under Section 3003.1(a) of the Tax Code and
that Taxpayer failed to file a timely refund petition(s) for the years at issue in this
matter, 2009 and 2010. Because the filing of a refund petition for a specific tax year
under Section 3003.1(a) of the Tax Code does not operate as an automatic appeal
with respect to subsequent tax years, I am compelled to agree with the majority’s
disposition of this appeal.




                                             P. KEVIN BROBSON, Judge




       2
         Act of March 4, 1971, P.L. 6, added by the Act of July 1, 1985, P.L. 78, as amended,
72 P.S. § 10003.1(a).

                                          PKB-3
