Opinion
No. 1551 C.D. 2010
06-14-2011
First Korean Church of New York, Inc., Appellant v. Montgomery County Board of Assessment Appeals, Cheltenham Township, Cheltenham Township School District, Montgomery County and Montgomery County Board of Commissioners
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE COHN JUBELIRER
This matter is again before us on appeal by First Korean Church of New York, Inc. (FKC) after we remanded this matter to the Court of Common Pleas of Montgomery County (trial court) to address FKC's claim that its property is entitled to a tax exemption as a principal place of religious worship pursuant to The Fourth to Eighth Class County Assessment Law (Law). See First Korean Church of New York, Inc. v. Montgomery County Board of Assessment Appeals, No. 2194 C.D. 2005 (Pa. Cmwlth. Nov. 15, 2006) (FKC I). After conducting a two-day, non-jury trial in which evidence and testimony were submitted and an inspection of the property took place, the trial court affirmed the Montgomery County Board of Assessment Appeals' (Assessment Board) denial of FKC's Application for the Exemption of Real Estate (Application) for religious use purposes based on its finding that the property at issue was not primarily used for religious worship.
Act of May 21, 1943, P.L. 571, as amended, formerly 72 P.S. §§ 5453.101 - 5453.706, repealed by Section 6(l)(ii) of the Act of October 27, 2010, P.L. 895, effective January 1, 2011. Former Section 202, 72 P.S. § 5453.202, listed the exemptions from taxation, and a substantially similar provision is now found at 53 Pa. C.S. § 8812(a). As we noted in First Korean Church of New York, Inc. v. Montgomery County Board of Assessment Appeals, No. 2194 C.D. 2005 (Pa. Cmwlth. Nov. 15, 2006) (FKC I), in its Memorandum before the Assessment Board, FKC relied on Section 204 of The General County Assessment Law, Act of May 22, 1933, P.L. 853, as amended, 72 P.S. § 5020-204. In its brief to this Court in the current appeal and in FKC I, FKC relies on both sections. These two sections offer nearly identical exemptions, and this Court has ruled that the two should be read synonymously. Mount Zion New Life Center v. Board of Assessment and Revision of Taxes and Appeals, 503 A.2d 1065, 1067 n.3 (Pa. Cmwlth. 1986). Given the similarity of the two sections, we will reference only the Law.
In FKC I, we noted that the trial court granted Cheltenham Township School District's (School District) and Cheltenham Township's (Township) joint motion for summary judgment, which the Montgomery County Board of Assessment Appeals (Assessment Board) and Montgomery County (County) (collectively, Appellees) joined because the trial court determined that a tax exemption may not be given for uses that are not legal under the zoning ordinance and FKC's religious use of the property was not authorized within the R-2 zoning district. However, prior to the argument in FKC I, Appellees apprised this Court of authority adverse to the trial court's decision and its position. See City of Pittsburgh v. Board of Property Assessment, Appeals and Review of County of Allegheny, 412 A.2d 661, 662-63 (Pa. Cmwlth. 1980) (rejecting the argument that if the particular use of the property is not within the bounds of the applicable zoning regulations, it cannot be tax exempt and concluding that "[t]he sole requirement for tax exemption of a charity's property is that the actual, present use be in conformity with the purposes of the charitable institution"). As such, this Court remanded the matter to the trial court for further proceedings to determine whether the property at issue was entitled to a tax exemption without regard to whether the use is legal under the zoning ordinance.
FKC acquired the property at issue in 1996 at a Sheriff's sale. The property is located at 920 Spring Avenue, Elkins Park, Cheltenham Township, Pennsylvania, and consists of two parcels totaling 33.85 acres (one parcel of 23.79 acres and one of 10.06 acres). The property is completely enclosed by an iron fence and contains three buildings that are in total disrepair: (1) Lynnewood Hall, a 110 room mansion; (2) Conklin Hall, a 44 room residence; and (3) a Gate House. The pastor/caretaker of the property, Banghwan Oh, and his family reside in Conklin Hall.
In 1998, FKC filed the Application to the Assessment Board noting that "[p]rior to June 25, 1996 and since 1952, the property was used exclusively for the same religious purpose." FKC I, slip op. at 2-3 (quoting Application). In its memorandum of law to the Assessment Board in support of its Application, FKC argued that it was entitled to an exemption because FKC is a purely public charity, and the property is used as a seminary and place of regularly stated religious worship. The Assessment Board conducted a hearing that was not transcribed and had an assessor review the property.
Before this Court at oral argument, FKC asserted that it is seeking an exemption solely because the property is a place of regularly stated religious worship.
Around the same time that FKC filed its Application to the Assessment Board, FKC had also applied for zoning relief and was denied a special exception for religious use. The Township of Cheltenham Zoning Hearing Board (Zoning Board) determined that granting the exception would create an adverse effect on the public health, safety, and welfare of the residential area and vary the character of the zoning district. (Zoning Board Decision at 19-23, November 19, 1998, R.R. at 464a-468a.) On appeal, the trial court affirmed the Zoning Board, which this Court ultimately affirmed in 2000. See First Korean Church of New York, Inc. v. Township of Cheltenham Zoning Hearing Board, No. 326 C.D. 2000 (Pa. Cmwlth. Nov. 13, 2000). In May 2001, the Supreme Court denied FKC's petition for allowance of appeal of the zoning case. First Korean Church of New York, Inc. v. Township of Cheltenham Zoning Hearing Board, 567 Pa. 749, 788 A.2d 380 (2001). In 2003, the special exceptions pertaining to religious use were revoked by Cheltenham Township (Township) by amendment to the zoning ordinance.
The Assessment Board denied the Application on December 4, 1998, and FKC filed the instant appeal on December 18, 1998. The trial court's docket indicates that relatively little activity took place until 2005 when a joint Motion for Summary Judgment was filed by Cheltenham Township School District (School District) and Township, which the Assessment Board and Montgomery County (County) (collectively, Appellees) joined. FKC responded by filing a Motion for Summary Judgment and, in 2005, the trial court granted the Appellees' motion and denied FKC's motion. On appeal, this Court in FKC I affirmed the denial of FKC's motion, reversed the grant of Appellees' motion, and remanded the matter to the trial court to determine whether the property was entitled to a tax exemption without considering whether the use was authorized by the applicable zoning ordinance.
On remand, the trial court conducted a two-day, non-jury trial on March 9-10, 2010, during which the parties and trial judge inspected the property. On March 25, 2010, FKC filed a Motion to Reopen the Record so that it could submit additional evidence and question new rebuttal witnesses. The trial court denied FKC's Motion to Reopen the Record on March 30, 2010. On April 16, 2010, the trial court issued an order determining that FKC was not entitled to a tax exemption as an actual place of regularly stated religious worship. On June 23, 2010, the trial court denied FKC's post-trial motions and amended post-trial motions, and FKC appealed that final order to this Court. The trial court issued an opinion pursuant to Pa. R.A.P. 1925(a) in which it made factual findings from the 2010 non-jury trial, which we summarize below.
Prior to the Sheriff's sale in 1996, the property was owned by the Faith Theological Seminary (FTS), which continued to operate on the property for at least one year following the Sheriff's sale. The areas of the property that FKC seeks to designate as tax exempt for regularly stated religious use are: (1) the driveway; (2) the outdoor prayer area; and (3) various rooms in Conklin Hall and Lynnewood Hall that are allegedly used for religious purposes.
Before the trial court, FKC alleged that the church is a Korean Presbyterian denomination, which is led by Richard S. Yoon, M.D. (Dr. Yoon), and that the pastor at the property is Mr. Oh. Dr. Yoon testified that he travels from New York to the property once a month to preside over services and that Mr. Oh presides over all of the other religious services on the property. FKC claims that the services take place either inside or outside every Sunday from 4:30 p.m. to 6:00 p.m. After the services, FKC asserts that congregants go to Lynnewood Hall for a celebratory religious dinner. There are three entrances on the property, two of which are completely secured by padlocks and are never used, and one entrance that is locked but controlled by a remote control device operated by Mr. Oh.
The trial judge and the attorneys visited the property on March 9, 2010 and the trial court found the property to be "in extraordinary disrepair," (FOF ¶ 15), the outside grounds were "overgrown and unkept," there were several abandoned vehicles on the property, there was a sign to "keep out," and there were several dogs on the property used to help secure the premises, (FOF ¶ 13). The trial court also noted that the rooms in Conklin Hall occupied by Mr. Oh and his family are the only rooms on the property that are heated.
The trial court found that the property requires more than ten million dollars in repairs to make the property usable. (FOF ¶ 15.)
Mr. Oh testified that since he became the pastor at the property in 2005, either he or Dr. Yoon performs a 4:30 p.m. church service every Sunday on the property. Mr. Oh also admitted that frequently, only his family attends the religious services. Mr. Oh testified that he opens the main entrance every Sunday for the church service, and he has never missed a Sunday service on the property. Mr. Oh testified that, if a parishioner is late for Sunday service, they can call his telephone number and either he or his family members can open the gates via remote control. Although there is no sign on the property identifying it as a church, FKC asserts that this is due to a zoning restriction.
Lt. John Weed, a police officer with the Cheltenham Police Department (Police), testified on behalf of Appellees, as follows. In November 2009, his Police Chief, John Norris, ordered him to conduct surveillance of the property on random Sundays from 4:00 p.m. to 6:00 p.m. "to monitor people" attending church services at the property. (Hr'g Tr. at 69-70, March 10, 2010, R.R. at 145a-46a.) Lt. Weed personally conducted surveillance on the property on seven different occasions, and Lt. Joseph Gruver conducted surveillance on the property on one occasion. (Hr'g Tr. at 70, R.R. at 146a.) Lt. Weed "compiled reports for each surveillance, kept the file and . . . added Lieutenant Gruver's report when completed." (Hr'g Tr. at 70, R.R. at 146a.) On the days Lt. Weed conducted surveillance, he would arrive at the property between 3:25 and 3:40, circle the perimeter of the property, and would check the three gates on the property to see if they were open or closed. (Hr'g Tr. at 75, R.R. at 151a.) Lt. Weed explained that, upon examination of the gates, "[t]he gates were chained closed, padlocked, rusted, and some of them were rusted through in an inoperable condition; except for the main gate, which was closed and would operate on some type of remote control." (Hr'g Tr. at 76, R.R. at 152a.) On all seven occasions that Lt. Weed conducted surveillance on the property, he did not see anyone from outside the property enter or exit the property, but only saw Mr. Oh's minivan drive from Conklin Hall to Lynnewood Hall. (Hr'g Tr. at 81-89, 100-03, R.R. at 157a-65a, 177a-79a.)
The trial court found Lt. Weed and the surveillance evidence "entirely credible." (FOF ¶ 34.) The trial court discredited all of FKC's witnesses. (Trial Ct. Op. at 12.) Based on the credited evidence the trial court found that, at all the times when FKC's witnesses' claimed that the gates were open and religious services were supposedly taking place, the gates were locked, remained unopened, and no one other than Mr. Oh entered the property at the time of the scheduled church services.
The trial court also noted that, although FKC introduced photographs of outdoor prayer, FKC's witnesses acknowledged that the photographs were taken before 1998. Additionally, the trial court noted that FKC did not produce photographs or church programs from any time period relevant to this litigation, and that some of the photographs were taken when the property was owned by the prior owner, FTS. The trial court concluded that "the evidence clearly established that the property is not primarily used for religious worship," but rather, was "used as a residence by Mr. Oh and his family." (Trial Ct. Op. at 11-12.) Accordingly, the trial court determined that FKC failed to show that any actual regular church-related activity has taken place on the property at anytime from 1998 through the present and, as such, was not entitled to a tax exemption for religious worship. FKC appeals to this Court.
Our "scope of review in a tax assessment appeal is limited to a determination of whether the trial court abused its discretion, committed an error of law or made findings unsupported by substantial evidence." Benedictine Sisters of Pittsburgh v. Fayette County Board of Assessment Appeals, 844 A.2d 86, 88 n.3 (Pa. Cmwlth. 2004).
On appeal, FKC argues that the trial court committed an error of law and abused its discretion. As articulated before the trial court, FKC first argues that the trial court erred in denying its Application because the evidence of record establishes that a total of 7 acres of the property (Lynnewood Hall (1.5 acres); Conklin Hall (1 acre); parking area (.5 acre); driveway (1 acre); outdoor worship area (2 acres); and fence (1 acre)) is entitled to a tax exemption under the Law because that portion of the property is either used for religious purposes or necessary to secure the tax exempt property. See Benedictine Sisters of Pittsburgh v. Fayette County Board of Assessment Appeals, 844 A.2d 86, 89 (Pa. Cmwlth. 2004) (holding that "a property need not be used exclusively for regularly stated worship in order to qualify for a [tax] exemption"). FKC argues that it was given tax exempt status in 1980 as a church and there is no evidence that the property at issue is used for any other purpose. FKC asserts that Lynnewood Hall contains a chapel, kitchen, nursery, choir room, prayer rooms, and other rooms used as a church, and that the buildings on the property are used exclusively as part of a church program. Most importantly, FKC asserts that Appellees have repeatedly admitted that the property is used as a church. (See Letter from Township to Dr. Yoon, (May 20, 1998), R.R. at 344a; Affidavit of David Lynch, Director of Township's Department of Engineering and Zoning and Inspection, R.R. at 524a; Appellees' Motion for Summary Judgment, R.R. at 347a-50a; Hr'g Tr. at 3-7, September 25, 2005, R.R. at 529a-33a; Statement of Material Facts in First Korean Church, Inc. v. Cheltenham Township Zoning Hearing Board, No 2:05-cv-06389-NS (E.D. Pa. January 15, 2009), R.R. at 431a-44a; Zoning Board's Determination denying FKC special exception, R.R. at 446a-70a; Dep. of Mark Grabfelder, Assessor for County, March 26, 2001, R.R. at 472a-503a.) FKC contends that the trial court erred in crediting and relying on the surveillance evidence submitted by Appellees. FKC argues that Appellees never sought a search warrant to conduct a wiretap, attempted to attend services, or interview anyone who did attend their services to investigate the alleged tax fraud because they knew that church services were taking place. Additionally, FKC alleges that Lt. Weed's testimony was inconsistent with his surveillance reports because four out of eight of the surveillance reports fail to state whether vehicles entered or exited the property. Moreover, on four occasions, FKC asserts that Mr. Oh was seen traveling from his residence at Conklin Hall to Lynnewood Hall around the service times and, on two occasions, lights were seen on in Lynnewood Hall, consistent with ongoing services.
In the interest of clarity, we have streamlined the issues presented by FKC.
Additionally, FKC argues that there is a "videotape" that proves that worship is taking place at the property. However, as FKC acknowledged at oral argument before this Court, this videotape was not part of the original record below because it was part of FKC's Motion to Reopen the Record, which the trial court denied. Therefore, this piece of evidence cannot be viewed or considered by this Court on appeal.
FKC also argues that the trial court erred because it should have excluded the surveillance evidence from the record for unfair surprise because Appellees' witnesses and exhibits with regard to the surveillance of the property were not identified until two days before trial, and Appellees did not supplement their responses to the interrogatories. FKC contends that the trial court should have ruled this evidence inadmissible, reopened the record to allow the testimony of Chief Norris and Lt. Gruver, or granted the Motion to Exclude the witnesses and exhibits for failure to supplement. FKC argues that the surveillance evidence was the result of a sham "tax fraud investigation" ordered by Appellees' counsel merely to create trial evidence, which never resulted in any charges being filed. Therefore, FKC argues that the surveillance reports are hearsay evidence and not within the business records exception to the hearsay rule.
Chief of Police Norris did not testify at trial and, therefore, FKC was unable to cross-examine him to ask why an investigation was ordered in the first place with changing frequency of times to conduct surveillance. Additionally, Lt. Gruver, who conducted surveillance on one of the eight days of surveillance, never testified and was not available to be cross-examined. Therefore, FKC argues that the trial court should have reopened the record.
Pursuant to our scope of review, we conclude that the trial court did not abuse its discretion or commit an error of law in affirming the Assessment Board's denial of FKC's Application based on its finding that the property was not primarily used for religious worship. Moreover, we conclude that the trial court was correct in denying FKC's Motion to Reopen the Record. Because the trial court has accurately articulated and thoroughly analyzed the issues, and correctly applied the law, this Court affirms the order of the trial court on the basis of its well-reasoned opinion issued by the Honorable Arthur R. Tilson of the Court of Common Pleas of Montgomery County, in First Korean Church of New York, Inc. v. Montgomery County Board of Assessment Appeals, et. al., (Montgomery County, Civil Action No. 98-22396, filed November 12, 2010).
We note that contrary to Appellees' assertion that the Zoning Board's determination denying FKC's request for a special exception and Mr. Grabfelder's deposition are not part of the original record and, thus, cannot be reviewed by this Court, these documents were presented to the trial court below and have become part of the supplemental record that was filed with this Court on April 27, 2011. Therefore, this Court may consider them. However, these documents do not support FKC's position that the trial court erred. A review of these documents, in whole, basically provides an explanation of how the property physically appears. Much like the trial court's decision, these documents describe the property as dilapidated and run down, and indicate that the intent of parts of the property by its physical features seems to be church-related. However, the appearance of a property is not the legal standard for determining whether a property is entitled to a tax exemption under the Law. As explained by this Court in Mount Zion New Life Center, 503 A.2d at 1071, there must be credible evidence presented that the primary use of the property is for regularly stated religious worship and there was no credited evidence submitted by FKC that the property is used as "an active church with regular worship on any portion of the premises," (Trial Ct. Op. at 12), from 1998 to the present, even though it contains a chapel and other rooms that look like they could be used for religious worship. As such, the trial court did not err in concluding that Lynnewood Hall, Conklin Hall, the outdoor areas, and parking areas are not tax exempt under the Law.
/s/ _________
RENÉE COHN JUBELIRER, Judge Judge Butler did not participate in the decision in this case. ORDER
NOW, June 14, 2011, the final order of the Court of Common Pleas of Montgomery County, dated June 23, 2010, in the above-captioned matter is hereby AFFIRMED on the basis of the opinion issued by the Honorable Arthur R. Tilson in First Korean Church of New York, Inc. v. Montgomery County Board of Assessment Appeals, et. al., (Montgomery County, Civil Action No. 98-22396, filed November 12, 2010).
/s/ _________
RENÉE COHN JUBELIRER, Judge