2004 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

6-10-2004

Gass v. Allegheny

Precedential or Non-Precedential: Precedential

Docket No. 03-2679

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"Gass v. Allegheny" (2004). 2004 Decisions. Paper 560.

http://digitalcommons.law.villanova.edu/thirdcircuit_2004/560
PRECEDENTIAL

UNITED STATES COURT OF

APPEALS FOR THE THIRD CIRCUIT

 

No. 03-2679

 

HERBERT S. GASS, JR.;

JOHN ZITELLI, an individual;

DIANE ZITELLI, his wife;

JEFF CORSELLO, an individual;

LYNN CORSELLO, his wife;

MICHAEL LEAHY, an individual;

DOMENIC DIPILATO, an individual;

ANNA DIPILATO, his wife;

ROBINHILL DEVELOPMENT 

 COMPANY

v.

COUNTY OF ALLEGHENY, 

PENNSYLVANIA;

BOARD OF PROPERTY 

ASSESSMENT, APPEALS

AND REVIEW OF ALLEGHENY 

 COUNTY;

KEVIN MCKEEGIN, an individual;

PATRICIA MCCULLOUGH, an 

 individual;

JERRY SPEER, an individual;

JAMES SKINZER, an individual;

DEBORAH BARON, an individual;

FREDERICK VALENCENTI, an 

 individual

Herbert S. Gass, Jr.; John Zitelli;

Diane Zitelli; *Jeff Corsello; 

*Lynn Corsello;

Robinhill Development Company,

 Appellants

(*Per Amended Notice of Appeal filed

6/12/03)

 

On Appeal from the United States 

District Court for the 

Western District of Pennsylvania

(D.C. Civil No. 02-cv-01394)

District Judge: Hon. Joy F. Conti

 

Argued January 12, 2004

Before: SLOVITER, RENDELL, and

ALDISERT, Circuit Judges

(Filed June 10, 2004)

 

Robert A. Goldman (Argued) 

Pittsburgh, PA l5234

Attorney for Appellants

Charles P. McCullough

County Solicitor

Caroline P. Liebenguth (Argued)

Assistant County Solicitor

Isobel Storch

Solicitor

Board of Property Assessment

Office of Allegheny County Law

Department

Pittsburgh, PA l5219

Attorneys for Appellees
2

OPINION OF THE COURT

SLOVITER, Circuit Judge.

Appellants, property-owning

taxpayers in Allegheny County, filed this

suit asserting that the Allegheny County

Board of Property Assessment, Appeals

and Review (the Board) has adopted a

policy, custom or practice in processing

appeals from property tax assessments that

violates their rights to due process. The

District Court dismissed this action for

lack of subject-matter jurisdiction because

of the Tax Injunction Act, 28 U.S.C. §

1341. Because the Tax Injunction Act

deprives federal courts of jurisdiction to

review challenges to a state property tax

system where the state provides a plain,

speedy and efficient remedy, we will

affirm the decision of the District Court.

I.

Appellants, Herbert S. Gass, Jr.,

John and Diane Zitelli, Jeff and Lynn

Corsello, Michael Leahy, Domenic and

Anna DiPilato, and Robinhi ll

Development Company, appealed their

real property assessments in 2001 and

2002 to the Board pursuant to the

procedures set out in Section 207.01, et

seq. of the Administrative Code of

Allegheny County. The Board’s hearing

officers held appeals hearings for each of

the Appellants and made recommendations

to the Board for final resolution of their

tax liability. Appellants allege that the

Board considered ex parte evidence

regarding market values in making the

final assessments.

On August 9, 2002, Appellants filed

this action pursuant to 42 U.S.C. § 1983 in

the Western District of Pennsylvania

seeking a declaratory judgment that

Appellees, the County of Allegheny, the

Board and individual Board members,1

violated their due process rights by

encouraging hearing officers to seek out ex

parte evidence of market values and to

consider such evidence after the hearings,

without affording the property owners

notice or the opportunity to respond to the

new evidence. Appellants also claimed

that hearing officers made arbitrary and

capricious recommendations to the Board

as to the assessed value of each of their

properties.

The Board moved to dismiss the

case on the ground that the Tax Injunction

Act and principles of comity prevent

federal courts from exercising subjectmatter jurisdiction over a challenge to a

state tax system. Appellants responded

that although the Tax Injunction Act bars

federal jurisdiction over challenges to a

state’s assessment, levy, or collection of

property taxes, it does not bar challenges

to a state’s post-payment appeals

procedures.

The District Court referred the

motion to dismiss to Magistrate Judge Ila

 

1The named Board members are Kevin

McKeegin, Patricia McCullough, Jerry

Speer, James Skinzer, Deborah Baron, and

Frederick Valencenti.
3

Jeanne Sensenich for a Report and

Recommendation (R&R). Magistrate

Judge Sensenich issued a thorough, wellreasoned report recommending that the

District Court grant the Board’s motion to

dismiss for lack of subject-matter

jurisdiction. She reasoned that if a federal

court could award damages or declare a

state tax system unconstitutional, it could

halt the proper functioning of state

government in a manner that was

antithetical to principles of comity. Judge

Sensenich thus rejected Appellants’

asserted distinction between the taxing

power and the appeals process. Finally,

Judge Sensenich found that, in light of

recent additions to Pennsylvania law,

Pennsylvania’s courts provide a “plain,

speedy, and efficient” remedy through the

process for appeal of tax assessments. The

District Court adopted the R&R as the

opinion of the court and granted the

Board’s motion to dismiss for lack of

jurisdiction.

On appeal, Appellants argue that 1)

the Tax Injunction Act does not apply to

their challenge to Pennsylvania’s postpayment appeals process; 2) even if the

Tax Injunction Act applies to their case,

the federal courts still have jurisdiction

because Appellants lack a plain, speedy

and efficient remedy at state law; and/or 3)

the Tax Injunction Act is unconstitutional.

II.

The Tax Injunction Act provides

that “[t]he district courts shall not enjoin,

suspend or restrain the assessment, levy or

collection of any tax under State law

where a plain, speedy and efficient remedy

may be had in the courts of such State.”

28 U.S.C. § 1341. Although the express

language of the Tax Injunction Act only

refers to injunctive actions, the Supreme

Court has held that the Tax Injunction Act

also prohibits federal courts from issuing

declaratory judgments holding state tax

laws unconstitutional. California v. Grace

Brethren Church, 457 U.S. 393, 408

(1982).

A.

Appellants’ first argument is that

the Tax Injunction Act does not apply

because they have not asked the District

Court to “enjoin, suspend or restrain the

assessment, levy or collection of any tax.”

Appellants’ Br. at 10 (quoting 28 U.S.C. §

1341). Appellants argue that they only

challenge the post-collection appeals

process, which does not implicate the

Commonwealth’s ability to assess, levy, or

collect taxes as described in the text of the

Tax Injunction Act.2

As noted above, Judge Sensenich

rejected their attempt to distinguish their

challenge from the type of challenge

covered by the Act. She concluded that:

[appellants] ultimately []

challenge the methods used

by the Board to assess

 

2Although Appellants’ initial complaint

also requested damages, they clarified

during oral argument that they only seek

declaratory relief, the cost of the appeal

and attorneys’ fees. 
4

property values (i.e.,

the Board improperly

considers ex parte

evidence regarding

market values after

the appeal hearings

are concluded to

dete rmin e

assessment values)

and not the appeal

process itself. This

is exactly the type of

claim contemplated

by Congress in

enacting the Tax

Injunction Act . . . .

App. at 15. We agree. The appeal process

is directed to the Board’s ultimate goal and

responsibility of determining the proper

amount of tax to assess – a power of

“assessment” that explicitly falls within

the ambit of the Tax Injunction Act.

Appellants’ prior payment of the tax does

not change the fact that they seek to enjoin

Pennsylvania’s finalization of assessments

or re-assessments of taxes. Appellants’

attempt to distinguish the appeals process

from the tax assessment is unpersuasive.

B.

The Tax Injunction Act divests

federal courts of jurisdiction only if the

state fails to provide a “plain, speedy and

efficient” remedy in its court. Appellants

argue that the federal courts have

jurisdiction over this case because

Pennsylvania has failed to provide a

“plain, speedy and efficient” remedy at

state law.

In determining whether the remedy

in Pennsylvania courts is “plain, speedy

and efficient,” we are guided by the

Supreme Court's decision in Rosewell v.

La Salle National Bank, 450 U.S. 503

(1981). In Rosewell, a taxpayer

challenged Illinois’ real estate tax refund

procedure, which required taxpayers to pay

the tax first and then attempt to contest the

assessment and obtain a refund. The

plaintiff in Rosewell refused to pay her tax

assessments because they were set at a

“discriminatory level.” Id. at 518 n.22.

The plaintiff filed a Section 1983 action

and the defendants moved to dismiss for

lack of jurisdiction. Because the Court

found at the outset that the Tax Injunction

Act “generally prohibits federal district

courts from enjoining state tax

administration,” the Court focused on the

question of whether Illinois provided an

adequate state remedy. Id. at 512.

In Rosewell, the Court construed

“plain, speedy and efficient” to mean that

a state court must meet “certain minimal

procedural criteria,” but it did not require

that the state’s remedy be the best, most

convenient, or speediest one. Id.

(emphasis in original); see also id. at 518-

21 (stating that two-year delay in state

court, although regrettable, was not so

egregious that it ran afoul of the Act’s

requirement of a “speedy” remedy).

Congress’ intent in requiring that the state

provide a plain, speedy and efficient

remedy was to ensure that the taxpayer be

afforded “a full hearing and judicial

determination of the controversy,” id. at
5

513 (quoting testimony of Senator Bone,

18 Cong. Rec. 1416 (1937)), and be able to

appeal to the United States Supreme Court,

id. (quoting S. Rep. No. 1035, at 2 (1937)).

In light of the Supreme Court’s

reluctance “‘to interfere with the operation

of state tax systems,’” and desire to “‘be

faithful to the congressional intent to limit

drastically federal court interference with

state tax systems,’” we have stated that

“we must construe narrowly the ‘plain,

speedy and efficient’ exception to the Tax

Injunction Act.” Sipe v. Amerada Hess

Corp., 689 F.2d 396, 404 (3d Cir. 1982)

(quoting Grace Brethren Church, 

457 U.S. at 412, 413).

We confronted a similar challenge

to the one at bar in Behe v. Chester County

Board of Assessment Appeals, 952 F.2d

66 (3d Cir. 1991). Behe and other

homeowners who claimed that Chester

County violated their constitutional rights

by failing to revise property assessments

annually and causing differential tax

burdens between property taxes on newer

and older properties filed their suit in

federal court pursuant to 42 U.S.C. § 1983.

They argued that the Tax Injunction Act

did not divest the federal courts of

jurisdiction because the Pennsylvania

courts did not provide a “plain, speedy and

efficient” remedy for their claim.

Following an examination of the relevant

causes of action and procedures for

appealing tax assessmentsin Pennsylvania,

we concluded that Pennsylvania did

provide a “plain, speedy, and efficient”

remedy for the purposes of the Tax

Injunction Act and dismissed the case for

lack of subject-matter jurisdiction. Id. at

68-71.

Shortly thereafter, we reaffirmed

the continued vitality of that conclusion in

Balazik v. County of Dauphin, 44 F.3d 209

(3d Cir. 1995), where we stated:

Upon review of the state law

canvassed in Behe, we see no need

to rehearse those findings here,

other than to note that since that

time [that Behe was decided] the

Pennsylvania Supreme Court has

made it easier for taxpayers to

bypass existing statu t o r y

procedures and bring an action

directly in state court. We hold that

Pennsylvania provides a “plain,

adequate and complete” remedy for

§ 1983 plaintiffs challenging state

taxation policies.

Id. at 218 (emphasis added). Critically,

Appellants point to no subsequent case law

or legislation that suggests that

Pennsylvania has made it more difficult to

bring an action challenging tax assessment

schemes in state court. 

Other similarly-situated plaintiffs

availed themselves of Pennsylvania’s court

system by filing an almost identical action

to the one before us in the Court of

Common Pleas of Allegheny County. In

2002, they filed a class action, challenging,

inter alia, the County’s alleged practice of

permitting and encouraging the Appeals

Board to use ex parte evidence after

hearings in violation of their due process

rights. Kowenhoven v. County of
6

Allegheny, No. GD02-21763, slip op. at 1-

3 (Ct. Com. Pl. of Allegheny County July

10, 2003). The Board filed preliminary

objections, including a claim that an

adequate statutory remedy existed. The

court sustained the Board’s objections and

dismissed the suit because the plaintiffs

had “an adequate statutory remedy, namely

the appeal to the common pleas court for a

de novo hearing” on their assessment

disputes. Id. at 3; see also Murtagh v.

County of Berks, 715 A.2d 548, 550-51

(Pa. Commw. Ct. 1998) (en banc) (citing

Nat’l Private Truck Council, Inc. v. Okla.

Tax Comm’n, 515 U.S. 582 (1995))

(taxpayer may not maintain Section 1983

action where state’s administrative process

provides adequate remedy and taxpayer

failed to exhaust administrative remedy);

Jordan v. Fayette County Bd. of

Assessment Appeals, 782 A.2d 642, 644

(Pa. Commw. Ct. 2001) (en banc) (same).

Appellants here allege that they do

not have an adequate remedy in state court

because the Court of Common Pleas of

Allegheny Cou nty dismisse d the

Kowenhoven action. At the time that

Appellants filed their briefs in this court,

the Kowenhoven plaintiffs’ appeal to the

Commonwealth Court was still pending.

They thus argued before us that the

uncertainty of the pending appeal made the

availability of the state court remedy

questionable or less than “plain.”

However, since then, the Commonwealth

Court issued its opinion in Kowenhoven v.

County of Allegheny, 2004 WL 769711

(Pa. Commw. Ct. Apr. 13, 2004). It

affirmed the trial court’s order dismissing

the action, agreeing that there was an

adequate statutory remedy available.

However, its opinion included

language that was highly favorable to

Appellants, in that the court expressed

concern that the Board’s internal

guidelines appeared to be inappropriate.

Id. at *2. On one hand, the Board sent a

memo to hearing officers and case

reviewers directing that when making

recommendations, “Hearing Officers and

Case Reviewers are not to reappraise the

property orsubmit post-hearing evidence.”

Id. at *1 (quoting Allegheny County

Assessment Board Apr. 9, 2002 Memo to

Hearing Officers and Case Reviewers)

(emphasis in original). On the other hand,

the same memo also provided that “[a]

Hearing Officer and Case Reviewer who

has personal knowledge of an area or more

suitable sales comparables to those

introduced at a hearing may supply this

information for th e Board’s

consideration.” Id. The Commonwealth

Court characterized the latter practice as

“inject[ing] an improper element into the

process of adjudication,” id. at *4, which

“appears to fly in the face of procedural

due process notions, which require that

parties be afforded an opportunity to

confront the witnesses against them . . . .”

Id. at *2; see also id. at *4 (plaintiffs may

“challenge any improperly considered

evidence” and “improper evidentiary

matters approved in the Board's memo are

not permitted under the statute or the

constitution”). The Commonwealth Court

further noted that if the plaintiffs filed a de

novo appeal asserting that the Board
7

accepted and relied upon evidence not

permitted under the tax assessment statute,

the Board “will be required to reject that

improperly considered evidence and base

a decision only upon evidence properly

offered to the hearing officer which [the

plaintiffs] had an opportunity to challenge,

or such additional evidence that may be

then presented.” Id. at *4 (emphasis

added).

The Commonwealth Court rejected

the argument made by the plaintiffs that

they were entitled to pretermit the

administrative proceedings under Ward v.

Village of Monroeville. 409 U.S. 57

(1972) (holding that plaintiff challenging

constitutionality of statute authorizing

quasi-judicial proceedings was entitled to

due process in quasi-judicial hearing

beyond de novo appeal to trial court).

However, the Commonwealth Court held

that because the plaintiffs were

challenging the ap plic ation and

interpretation of the assessment statute,

rather than its constitutionality, Ward did

not support their argument. Id. at *2-3;

see also Jordan, 782 A.2d at 646 (holding

that attacks on the application of a statute,

rather than “frontal attacks” on a statute’s

constitutionality, do not trigger equity

jurisdiction and are appropriate for Board

review). The court thus concluded that

under the local rules

applicable in this case, [the

p l aintiffs] h ave th e

opportunity to claim in an

appeal to common pleas that

the implementation of the

process as enunciated in the

Board's policy memo results

in a violation of their

procedural due process

rights, or more simply to

assert that the Board

committed an error of law

b y co nsidering such

evidence.

Kowenhoven, 2004 WL 769711, at *4.

Based on the above, we reject

Appellants’ argument that Pennsylvania

provides inadequate remedies. The Tax

Injunction Act does not require that the

state courts provide a favorable substantive

outcome; instead, it only requires access to

the state courts and an opportunity for

meaningful review. Appellants’ failure to

obtain relief in the state courts does not

impugn either the adequacy or the

accessibility of the Commonwealth’s

courts. And the Commonwealth Court’s

dicta regarding the impropriety of

Allegheny County’s procedures suggests

that the court agrees with many of

Appellants’ objections, but nonetheless

requires that they pursue the appropriate

statutory and administrative remedies in

asserting those grievances. In short,

Pennsylvania’s requiremen t that

dissatisfi e d taxpaye rs purs u e

administrative remedies for as-applied

challenges does not imply that they are

without an adequate remedy.

Indeed, the Second Class County

Assessment law creates a seven-member

Board of Property Assessment, Appeals

and Review “[i]n order to more efficiently

and equitably assess and value persons,
8

property and subjects of taxation for

county purposes . . . .” 72 P.S. §§ 5452.1-

2. The Board is tasked with “hear[ing] all

cases of appeals from assessments, and all

complaints as to assessments, errors,

exonerations and refunds.” 72 P.S. §

5452.4(c). The Assessment Board of

Allegheny County also has promulgated

procedures and practices for Appeals

Hearings, including requirements that

hearing officers must provide reports with

factual findings, conclusions of law, and

recommendations to the full Board.

Kowenhoven, 2004 WL 769711, at *1

(citing Allegheny County’s Admin. Code

§ 207.07E). The General County

Assessment Law provides further

protections for dissatisfied taxpayers:

Whenev e r throug h

mathematical or clerical

error an assessment is made

more than it should have

been, and taxes are paid on

such incorrect assessment,

the county commissioners,

acting as a board of revision

of taxes, or the board for the

assessment and revision of

taxes, upon discovery of

such error and correction of

the assessment shall so

inform the appropriate

taxing district or districts,

which shall make a refund

to the taxpayer or taxpayers

for the period of the error or

six years, whichever is less,

from the date of application

for refund or discovery of

such error by the board.

72 P.S. § 5020-505.1. 

Pennsylvania provides for adequate

notice to taxpayers of the appeals

procedures. General County Assessment

Law 72 P.S. § 5020-508 requires that the

Board “give written or printed notice, at

least five days before the day of appeal, to

every taxable inhabitant within the

respective” taxable area, along with “the

amount of the present assessment,

valuation and ratio, the amount or sum of

which he stands rated, and the rate per cent

of the tax, and of the time and place of

such appeal.” The Board or its officers

must further give notice, by advertisement

in one or more local newspapers, at least

three weeks before the day of appeal, of

the time and place fixed for the appeal. 72

P.S. § 5020-509. Real estate owners who

feel aggrieved by an assessment of their

real estate may appeal from the decision of

the Board of Property Assessment,

Appeals and Review to the local Court of

Common Pleas, and may further appeal to

the Superior or Supreme Court. 72 P.S. §§

5020-518.1-519. In short, Appellants have

a fully-developed administrative and

judicial apparatus through which they may

grieve their claims. Because the state

forum provides the procedural minimum

required and “plainly” is accessible to

Appellants, the state court remedy is

adequate.

Appellants argue that if the federal

courts were to assume jurisdiction of their

claim, it would not upset the primary

purpose of the Act: preventing out-of-
state corporations from gaining unfair

advantages in litigation. It is true that this

court has previously suggested that one

purpose of the Tax Injunction Act was to

“deprive out-of-state corporations of an

advantage over state taxpayers in being

able to threaten localities with protracted

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

sue in federal court. Because the

Pennsylvania state courts are open to

Appellants, they may (continue to) pursue

their constitutional claims in state court.3

III.

For the foregoing reasons, we will

affirm the judgment of the District Court

finding that it lacks subject-matter

jurisdiction to review Appellants’ claim.

 

3Because the federal courts do not have

jurisdiction to review Appellants’ claim,

we need not address the substance of

Appellants’ claim regarding the use of ex

parte evidence during the appeals process.