Opinion
No. 1645 C.D. 2010
07-18-2011
William A. Seely, Appellant v. Ridgway Area School District, The County of Elk, and June H. Sorge, Daniel R. Freeburg, and Ron Beimel, individually as members of the Elk County Board of Commissioners
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE P. KEVIN BROBSON, Judge (P.)
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE BROBSON
Appellant William Seely (Seely) appeals from an order of the Court of Common Pleas of the Fifty-Ninth Judicial District, Elk County Branch, which sustained the preliminary objections filed by Elk County and the Elk County Board of Commissioners (collectively County Defendants) and the Ridgway Area School District (District) (collectively Defendants where applicable). Defendants filed the preliminary objections in response to Seely's Complaint, which we interpret as an as-applied constitutional challenge to the imposition of occupational and per capita taxes under The Local Tax Enabling Act, and a per capita tax under Section 679 of the Public School Code of 1949 (Public School Code). The trial court granted the preliminary objections and dismissed Seely's Complaint with prejudice, concluding that Seely could plead no facts that would support his claims. We affirm the trial court's order.
Seely also named the individual County Commissioners as defendants.
Seely also individually named the District superintendent and the individual officers and directors of the District's School Board.
Act of December 31, 1965, P.L. 1257, as amended, 53 P.S. §§ 6924.101 to .901, formerly 53 P.S. §§ 6901 - 6924. We interpret Seely's references to "Act 511" as references to The Local Tax Enabling Act.
Act of March 10, 1949, P.L. 30, as amended, 24 P.S. § 6-679. We interpret Seely's references to "Act 679" as references to Section 679 of The Public School Code. Seely also appears to rely upon Section 680 of the Public School Code, 24 P.S. § 6-680.
Seely averred in his Complaint that Defendants impose the above-noted taxes to fund the District. Seely asserted that the taxing authorities previously had and continue to have a duty to determine the amount of these taxes based upon a yearly "census," and that the taxing authorities previously used a census conducted by a Commonwealth-employed tax assessor. Seely asserted that the Commonwealth "removed" the tax assessor in 2007 for budget reasons, and that, thereafter, Defendants have not conducted a census for the purpose of imposing the taxes under the above-noted Acts, but nevertheless continue to impose the taxes. Seely asserted that Defendants' failure to hire someone to conduct an annual census for the purpose of imposing taxes has resulted in the collection of taxes from Seely and other citizens of Elk County on an unfair and unequal basis, because the alleged failure of Defendants to use an annual census results in the imposition of taxes based on stale data.
Seely also averred that the Borough of Ridgway has hired an assessor to conduct censuses for that municipal entity, but that such a census does not cure the alleged failure here because the District consists of three additional municipalities: Ridgway Township, Horton Township, and Spring Creek Township.
Based upon his claims that the Defendants' failure to conduct a census has resulted in the levying of an unconstitutional tax, Seely sought declaratory and injunctive relief. Seely asserted that from on or about 2007 to the present, he has suffered injuries as a result of Defendants' failure to impose and/or collect the taxes in a manner consistent with the constitution and statutes. Seely's Complaint sought a declaration that Defendants have violated the constitution and statutes and sought an order awarding costs and attorneys' fees and expenses of "defense." Seely also sought preliminary and permanent injunctive relief, specifically an order prohibiting Defendants from continuing to collect the taxes in this manner and "recission and correction of all acts . . . [Defendants have taken] with regard to the collection of the taxes."
Seely's Complaint also sought relief in mandamus to compel Defendants to (1) collect the taxes in a manner that satisfies constitutional and statutory requirements and/or (2) compel Defendants to stop the allegedly unlawful practice. Seely also seeks an order compelling the Defendants to implement "Act 130 of 200[8] . . . to correct abuses and/or inequalities in the collection . . . of occupational and/or per capita taxes under Act 511 and 679," and to submit a referendum to the voters relating to school district taxes in accordance with Act 130 of 2008.
Seely refers to Act 130 of 2007 in his Complaint. This citation appears to contain a typographical error, which his later citations confirm by reference to Act 130 of 2008 (Act 130). Act 130 of 2008 amended provisions of The Local Tax Enabling Act, Act of December 31, 1965, P.L. 1257, as amended, 53 P.S. §§ 6924.101-.901. In discussing this law, Seely refers to a referendum provision, but does not provide the specific statutory location of this law and the part of it relating to referendums. We discuss this claim and Act 130 below.
The County Defendants' preliminary objections primarily related to the fact that counties have no power to levy or collect taxes on behalf of school districts and the fact that the County has not levied or collected taxes pursuant to the statutes upon which Seely relies. Further, no statute authorizing the County to collect certain taxes requires it to conduct a census. Additionally, Act 130, upon which Seely relies in seeking relief in mandamus, relates to the Local Tax Enabling Act, which is not a law that applies to counties and which authorizes the exercise of discretion in holding tax referendums. Finally, the County Defendants asserted that the Complaint fails to set forth any claim for which relief can be granted as to the County.
The District raised similar objections to Seely's averment that the subject statutory provisions required it to conduct an annual census. Additionally, the District contended that Seely failed to state a claim regarding the constitutionality of the District's levying of per capita and occupational taxes. The District also asserted that Seely had an adequate statutory remedy. Further, the District, like the County Defendants, objected to Seely's mandamus claim, asserting that he was not entitled to relief compelling the District's performance of a discretionary act.
In its memorandum opinion, the trial court reached several key conclusions: (1) the County plays no role in the levying of taxes on behalf of the District; (2) the County has no authority to conduct a referendum under Act 130; (3) Seely failed to establish that his claims could not be addressed in a statutory appeal of the tax assessments he seeks to challenge; and (4) none of the statutory provisions upon which Seely relies require the District to conduct a census before levying a per capital or occupational tax.
Seely appealed the trial court's order and raises the following issues for this Court's review: (1) whether the trial court erred in concluding that Seely failed to plead facts suggesting the existence of a substantial constitutional question and that, therefore, Seely was required to seek relief through the available statutory appeal remedy; (2) whether the trial court erred in sustaining the demurrer to Seely's mandamus action seeking an order directing Defendants to conduct a referendum under Act 130; (3) whether, on the merits of his claim, the trial court erred in concluding that Defendants had no duty to conduct an annual census or create an annual list of residents in order to impose a per capita or occupational tax; (4) whether the trial court erred in dismissing Seely's Complaint without providing an opportunity for Seely to amend his Complaint; and (5) whether the trial court erred because it did not discuss in its opinion the additional legal argument Seely submitted to the trial court in accordance with a pre-determination order that the trial court issued requesting the parties to submit additional authority on the issues.
This Court's standard of review of a trial court's order sustaining preliminary objections is limited to considering whether the trial court erred as a matter of law or abused its discretion. Petty v. Hosp. Serv. Ass'n of Ne. Pennsylvania, 967 A.2d 439 (Pa. Cmwlth. 2009), affirmed, ___ Pa. ___, ___ A.3d ___ (No. 34 MAP 2010; filed June 20, 2011). In reviewing preliminary objections, we regard all well pleaded relevant and material facts as true, and it is appropriate for a court to sustain preliminary objections only when they are free and clear from doubt. Id.
We begin with our review of the pertinent statutory provisions and Seely's claim that the trial court erred in concluding that it could not exercise jurisdiction over Seely's Complaint seeking relief in the nature of mandamus and injunctive and declaratory relief. Seely relies upon two provisions of the Public School Code. The first provision relied upon by Seely, Section 679 of the Public School Code, provides that when a school district elects to levy a per capita tax, each resident or inhabitant of the school district over the age of eighteen must pay the tax. Section 680 of the Public School Code directs that in school districts that elect to levy a per capita tax, "it is the duty of the proper assessors" in the district to prepare a list of residents or inhabitants.
Act of March 10, 1949, P.L. 30, as amended, 24 P.S. §§ 1-101 - 27-2702.
We note at the outset that these provisions place absolutely no duty on the part of the County Defendants, and pertain only to school districts' taxing authority. As the County Defendants note, and as the trial court observed, the County Defendants play absolutely no role in the levying of taxes for the benefit of school districts.
Additionally, Section 1 of the Act of July 19, 1951, P.L. 1026, which pertains to local tax assessment, provides that school districts that are authorized to levy occupation or per capita taxes may "provide for an annual preparation of a list of residents or inhabitants of . . . such taxing authorit[ies] . . . by employes . . . to be used in the assessment and levy of its occupation [or] per capita . . . tax." Thus, this latter provision provides school districts with the power to elect to forego the creation of an annual list of residents or inhabitants by assessors if it assigns that task to its employees.
With these provisions in mind, we note that the primary focus of Seely's Complaint appears to be his averment that the Defendants have not conducted an annual census or created an annual list of residents or inhabitants before determining the amount of tax to impose upon each taxpayer. Seely alleges that this failure has resulted in the violation of his constitutional rights.
Defendants are correct that Seely's Complaint refers to a census, whereas the statutes he relies upon refer to a list. While we agree that the term "census" has a distinct meaning from the word "list," Seely did refer to Section 679 of the Public School Code in his averments, and, consequently, we will review the pleadings in his Complaint liberally to mean the "list" to which Section 679 refers.
At the time Seely filed his Complaint, Section 701 of the Fourth to Eighth Class County Assessment Law, provided persons aggrieved by a personal or property assessment with the right to appeal to the county board of assessment. Although trial courts have jurisdiction over appeals from determinations of county tax assessment boards, trial courts generally do not exercise jurisdiction over tax actions (such as an equity action) that a taxpayer initiates in a trial court. Beattie v. Allegheny County, 589 Pa. 113, 124, 907 A.2d 519, 526 (2006) (Beattie).
Act of May 21, 1943, P.L. 571, as amended, 72 P.S. § 5453.701, repealed by the Act of October 27, 2010, P.L. 895; see now 53 Pa. C.S. § 8844(c)(1).
The courts, however, have carved out exceptions to this general rule. In Borough of Green Tree v. Board of Property Assessments, 459 Pa. 268, 281, 328 A.2d 819, 825 (1974) (Green Tree), a plurality of our Supreme Court concluded that in order for a trial court to exercise equity jurisdiction over a taxpayer challenge, the taxpayer must satisfy a two-part test: (1) does the taxpayer raise a substantial constitutional question, and (2) does the taxpayer lack an adequate statutory remedy. Green Tree, 459 Pa. at 274, 328 A.2d at 822. Further, the taxpayer must plead more than a mere allegation of a substantial constitutional question. Id.
As the Supreme Court explained in Beattie, the "exception has sometimes been couched in terms of whether the trial court has equity jurisdiction to entertain the complaint. We have clarified, however, that the requirement of administrative exhaustion is a judge-made rule and does not pertain the existence of subject matter jurisdiction, but to whether such jurisdiction is properly exercised." Beattie, 589 Pa. at 124, 907 A.2d at 526 n.5 (citation omitted).
Although the courts have not set forth a specific test to determine what constitutes a "substantial constitutional question," those cases that have evaluated the issue have traditionally found substantial constitutional questions to exist when a taxpayer raises a facial constitutional challenge to a taxing provision or system. See id., 459 Pa. at 281, 328 A.2d at 825. ("The more clearly it appears that the question raised goes directly to the validity of the statute, the less need exists for the agency involved to throw light on the issue through exercise of its specialized fact-finding function or application of its administrative expertise.")
In Kowenhoven v. County of Allegheny, 587 Pa. 545, 901 A.2d 1003 (2006) (Kowenhoven), our Supreme Court reiterated the above-noted test but also identified a distinct circumstance in which a non-facial constitutional challenge satisfied the substantial constitutional question requirement necessary for a trial court to exercise equity jurisdiction. Kowenhoven involved a class action challenge to a county property assessment in which a class of taxpayers challenged the use of extra-record evidence by the Allegheny County Board of Assessment in rendering property assessments. Thus, the issue the taxpayers raised in that case involved a due process question relating to the procedural methodology employed by the county assessment board. The Supreme Court reasoned that there may exist several reasons why a court should exercise equity jurisdiction or consider a declaratory judgment request even though a party has the right to de novo review of a taxing tribunal's actions by a trial court. In essence, following Kowenhoven, the test remains the same, but other types of constitutional challenges may provide authority for a trial court's exercise of equity jurisdiction. In any event, regardless of the type of constitutional question a party may seek to raise, the Supreme Court again emphasized that a plaintiff must assert more than a mere allegation of a constitutional question. Kowenhoven, 587 Pa. at 559, 901 A.2d at 1012, quoting Green Tree, 459 Pa. at 274, 328 A.2d at 822 (quoting Rochester & Pittsburgh Coal Co. v. Indiana Cnty. Bd. of Assessment & Revision of Taxes, 438 Pa. 506, 508, 266 A.2d 78, 79 (1970)).
Moreover, in Beattie, our Supreme Court considered the question of whether a trial court correctly declined to exercise equity jurisdiction when a taxpayer claimed that Allegheny County's real estate assessment system violated the Uniformity Clauses of the Pennsylvania Constitution and/or the United States Constitution by causing a significant number of lower-valued homes to be over-assessed and some higher-valued homes to be under-assessed. The type of equitable relief the taxpayers sought was in the nature of mandamus, specifically an order directing the taxing authority to revise its assessments in a manner that satisfied the Uniformity Clause. The Supreme Court concluded that the taxpayers had failed to demonstrate substantial inequality in the system and to specify adequately how the taxing authority could apply the system in order to satisfy the Uniformity Clause requirement for equality. Significantly, the Supreme Court opined that a party could potentially plead the existence of a substantial constitutional question when charging that a taxing authority has misapplied a taxing statute. Beattie, 589 Pa. at 128, 907 A.2d at 528. In Beattie, although the Supreme Court reasoned that a trial court could exercise its equity jurisdiction over such a mandamus claim, the Court concluded that the trial court in that case properly dismissed the complaint due to insufficient pleading. The Supreme Court stated:
Art. III, § 1. Article III, Section 1 of the Pennsylvania Constitution provides that "[a]ll taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws."
[T]o support the proposition that the County was duty-bound to re-apply the . . . system in an alternative manner, Appellants' allegations would preliminarily have had to demonstrate the absence of rough or substantial equality in the present operation of the . . . system. They would also necessarily have had to specify the manner in which the system should be re-applied so that constitutionally acceptable results would obtain.Id. at 130, 907 A.2d at 530.
In this case, there is no question that Seely has not asserted a facial challenge to the taxes at issue. Rather, his claim is more similar to the challenge in Beattie—that the alleged failure of school district taxing authorities to conduct an annual census (or list), as he asserts statutory provisions require, results in a violation of his constitutional rights. Seely's claims, however, amount only to mere allegations of a constitutional question because he does not connect the alleged duty to create a list with any specific constitutional impairment. Seely simply avers that there is no annual census (or list) and merely suggests that, therefore, the tax imposed is inequitable because the District might change the amount of tax imposed on individuals if the number of taxpayers changes. Seely refers this Court to no case law supporting his particular constitutional allegations and fails to discuss in meaningful fashion how his factual averments support his claim of a constitutional violation. Unlike the situation in Kowenhoven, where the entity charged with the duty to provide a process for the evaluation and adjudication of tax challenges violated the procedural due process rights of the taxpayers, Seely has not asserted a claim that raises similar constitutional concerns. Additionally, as in Beattie, Seely has not offered either facts that demonstrate the inequality he asserts or how application of the alleged appropriate method would "obtain" the result he is seeking. We conclude, therefore, that his Complaint fails to satisfy the requirement to raise a substantial constitutional question.
Additionally, Seely has failed to assert any facts or legal arguments that support his claim that he has no adequate statutory remedy. Seely simply states in his brief that he has tried the statutory remedy and had no success. He does not identify the forum in which he supposedly sought to litigate his claims or explain what issue he presented in that forum or why, based upon any legal rationale, that forum was unable to address his claims. Consequently, we conclude that the trial court did not err in sustaining the Defendants' preliminary objections to Seely's claims for equitable and declaratory relief on the basis that Seely has an adequate statutory remedy. Accordingly, we conclude that the trial court did not err in dismissing Seely's requests for equitable relief, including his claims for injunctive and mandamus relief to compel the Defendants to comply with the alleged requirement to conduct a census or create a list of residents or inhabitants.
As to his request for declaratory relief, we also note that although the Declaratory Judgment Act, 42 Pa. C.S. §§ 7531-7541specifically states that the availability of a statutory remedy does not render declaratory relief unavailable, as the Supreme Court suggested in Kowenhoven, quoting Department of General Services v. Frank Briscoe Company, Inc., 502 Pa. 449, 459, 466 A.2d 1336, 1341 (1983), unless a taxpayer raises a substantial constitutional question and establishes the lack of an adequate statutory remedy, courts should refrain from considering declaratory judgment claims as a means to prejudge issues that the General Assembly has designated an administrative agency or entity to decide initially. Kowenhoven, 587 Pa. at 560, 901 A.2d at 1012-13.
Seely also seeks relief in mandamus to compel the Defendants to conduct a referendum as provided in Act 130. Seely does not refer the Court to the precise section of Act 130 at issue, and, in fact, we believe his reference to this act is erroneous, other than that Act 130 amended The Local Tax Enabling Act which sets forth certain taxing powers for certain types of school districts. A provision of the Taxpayer's Relief Act does provide school districts' board of directors with the discretionary authority to submit a tax referendum to school district voters during municipal elections. Even if Seely intended to rely upon this provision, we note that mandamus relief is generally not appropriate to compel a governmental entity to perform a discretionary act. Crozer Chester Med. Ctr. v. Dep't of Labor and Indus., 955 A.2d 1037, 1041 (Pa. Cmwlth. 2008), affirmed, ___ Pa. ___, ___ A.3d ___ (No. 59 MAP 2008; filed May 25, 2011). Consequently, because Seely's claim seeks to compel the District to exercise its discretion, we agree with Defendants that the trial court did not err in sustaining their preliminary objection to this claim.
The trial court, in addressing Seely's claims under Act 130 of 2008 referred to Section 301 of The Local Tax Enabling Act, 53 P.S. § 6924.301.1, but that provision does not appear to contain any provision relating to referendums.
Act of June 27, 2006, P.L. 1873, Spec. Sess. No. 1, 53 P.S. §§ 6926.101 to .5006.
Section 332 of the Taxpayer Relief Act, 53 P.S. § 6926.332.
With regard to Seely's argument that the trial court erred or abused its discretion in dismissing his Complaint with prejudice and denying his requests for reconsideration and to amend, we conclude that the trial court did not abuse its discretion or err as a matter of law. Seely is correct in asserting that trial courts generally should consider requests to amend complaints liberally. Holt v. Nw. Pa. Training P'ship Consortium, 694 A.2d 1134, 1138 (Pa. Cmwlth. 1997). Seely relies upon the arguments he makes on the merits in his brief to support his claim that the trial court abused its discretion. The trial court concluded initially, when it dismissed the Complaint with prejudice, that Seely would not be able to plead any additional facts that would support a constitutional claim. As the District notes, a trial court may exercise its discretion to deny a request to amend when an "initial complaint reveals the prima facie elements cannot be established and where the defects are so substantial amendment is unlikely to cure them." Feldman v. Lafayette Green Condo. Ass'n, 806 A.2d 497, 500 (Pa. Cmwlth. 2002).
As the District notes, the only arguments Seely seems to make is that (1) he could add additional plaintiffs to his Complaint, (2) he filed previous tax claims using the statutory process, and (3) although he referred to a census in his Complaint, he was referring to the "list of residents or inhabitants" identified in the statutes upon which he relies. On balance, given the lack of clarity in his brief and the failure to identify any additional specific facts that might alter the trial court's consideration of the Complaint, combined with the failure to demonstrate in his brief the existence of a substantial constitutional question, Beattie, the trial court appears to have exercised its discretion properly.
Seely also argues that the trial court erred in denying his request for leave to amend when the trial court did not discuss in its opinion any of the argument Seely submitted after oral argument but before the trial court issued its opinion and order sustaining the preliminary objections. Seely refers to no case law holding that a trial court must address all legal argument a party raises. Because we have concluded above that the trial court did not abuse its discretion in dismissing Seely's Complaint with prejudice and failing to issue orders on Seely's motions for reconsideration and to amend, we need not address this issue any further.
Accordingly, we affirm the trial court's order.
/s/_________
P. KEVIN BROBSON, Judge
ORDER
AND NOW, this 18th day of July, 2011, the order of the Court of Common Pleas of the Fifty-Ninth Judicial District, Elk County Branch, is AFFIRMED.
/s/_________
P. KEVIN BROBSON, Judge