Court Opinion

ID: 2912884
Source: CourtListenerOpinion
Date Created: 2015-09-10 17:10:26.931431+00
Date Added: 2024-06-11T15:21:27.043313
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Valley Forge Towers Apartments N,               :
LP; Morgan Properties Abrams Run                :
Owner LP; KBF Associates, LP; Gulph             :
Mills Village Apartments LP; and                :
The Lafayette at Valley Forge LP,               :
                         Appellants             :
                                                :
                      v.                        :
                                                :
Upper Merion Area School District               :   No. 1960 C.D. 2014
and Keystone Realty Advisors, LLC               :   Argued: May 8, 2015

BEFORE:        HONORABLE DAN PELLEGRINI, President Judge
               HONORABLE P. KEVIN BROBSON, Judge
               HONORABLE ANNE E. COVEY, Judge

OPINION BY
JUDGE COVEY                                         FILED: September 10, 2015

               Morgan Properties Abrams Run Owner LP, KBF Associates, LP, Gulph
Mills Village Apartments LP and The Lafayette at Valley Forge LP (collectively,
Taxpayers)1 appeal from the Montgomery County Common Pleas Court’s (trial court)
October 9, 2014 order sustaining Upper Merion Area School District’s (UMASD)
and Keystone Realty Advisors, LLC’s (Keystone Realty) (collectively, District)
preliminary objections to Taxpayers’ complaint seeking a declaratory judgment,
injunctive relief and damages (Complaint). There are three issues before the Court:
(1) whether Taxpayers stated a claim for which relief could be granted when they
alleged that the District violated Article 8, Section 1 of the Pennsylvania Constitution

       1
           Valley Forge Towers Apartments N, LP (Valley Forge Towers) was originally a named
plaintiff in the action; however, the parties discontinued the action as to Valley Forge Towers. By
July 7, 2015 order this Court granted the parties joint motion for leave to discontinue the action as
to Gulph Mills Village Apartments LP and The Lafayette at Valley Forge LP, and discontinued the
action as to Gulph Mills Village Apartments LP and The Lafayette at Valley Forge LP.
(Uniformity Clause) by evaluating and filing assessment appeals only against the
Taxpayers and similar commercial properties; (2) whether administrative exhaustion
principles prevent Taxpayers from bringing their Uniformity Clause challenge as an
independent equity action, rather than in separate assessment appeals; and (3)
whether Taxpayers alleged a proper negligence claim against Keystone Realty. After
review, we affirm.
              Taxpayers own apartment buildings in UMASD. UMASD filed annual
assessment appeals with the Montgomery County Board of Assessment Appeals
(Board) challenging the assessments of Taxpayers’ properties. The Board denied the
appeals and UMASD appealed to the trial court. The appeals remain pending before
the trial court.
              On May 2, 2014, Taxpayers filed their Complaint. Taxpayers allege in
the Complaint that UMASD contracted with Keystone Realty to recommend property
assessments from which UMASD should appeal. Taxpayers further contend that, as a
result of Keystone Realty’s recommendations, UMASD systematically selected and
appealed from commercial property assessments, including apartment buildings, but
did not appeal from residential property assessments. Finally, Taxpayers aver that
UMASD’s actions were part of a scheme between UMASD and Keystone Realty to
generate more tax revenue for UMASD which, in turn, would benefit Keystone
Realty, since it was paid a contingency fee of 25% of any increased revenue it
generated for UMASD.         Taxpayers claim that UMASD’s appeals solely of
commercial properties violated the Uniformity Clause.
              On May 28, 2014, the District filed its preliminary objections to the
Complaint to which Taxpayers responded on June 24, 2014. The trial court heard
argument on October 3, 2014, and sustained the preliminary objections by October 9,

                                         2
2014 order, thereby dismissing the Complaint with prejudice. Taxpayers appealed to
this Court.2

                     Pennsylvania Constitution’s Uniformity Clause
               Taxpayers first argue that UMASD’s selective assessment appeals
violate the Pennsylvania Constitution’s Uniformity Clause.                      Specifically, they
contend that “the [District] has concocted a scheme to ensure that commercial
properties, such as the [Taxpayers’] apartment buildings, are assessed at a higher ratio
to their fair market value than residential properties.” Taxpayers’ Br. at 13. The
District rejoins that Taxpayers have failed to establish a lack of uniformity or that
UMASD has acted in an unconstitutional manner. The District, inter alia, cites
Weissenberger v. Chester County Board of Assessment Appeals, 62 A.3d 501 (Pa.
Cmwlth. 2013) to support its position.
               The Pennsylvania Constitution’s Uniformity Clause provides: “All 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.” Pa.
Const. art. VIII, § 1.       Section 8855 of the Consolidated County Assessment Law
(Law) states in relevant part:

               A taxing district shall have the right to appeal any
               assessment within its jurisdiction in the same manner,
               subject to the same procedure and with like effect as if the

       2
              Our scope of review of an appeal from an order sustaining
              preliminary objections and dismissing a complaint is to determine
              whether the trial court committed legal error. When considering
              preliminary objections, we must accept as true all well-pled facts set
              forth in the complaint, as well as all inferences reasonably deducible
              therefrom, but not conclusions of law. Preliminary objections in the
              nature of a demurrer should be sustained only where the pleadings are
              clearly insufficient to establish a right to relief and any doubt must be
              resolved in favor of overruling the demurrer.
Dadds v. Walters, 924 A.2d 740, 742 (Pa. Cmwlth. 2007) (citations omitted).
                                                  3
             appeal were taken by a taxable person with respect to the
             assessment, and, in addition, may take an appeal from any
             decision of the board or court of common pleas as though it
             had been a party to the proceedings before the board or
             court even though it was not a party in fact.

53 Pa.C.S. § 8855. “[I]t is now well settled that municipal tax authorities, such as
school districts, may appeal a property’s assessment.” Weissenberger, 62 A.3d at
507.

                              Improper Classification
             Taxpayers assert that the trial court erred in relying on In re Springfield
School District, 101 A.3d 835 (Pa. Cmwlth. 2014) (Springfield II), because the
Springfield Court misinterpreted the Pennsylvania Supreme Court’s decision in
Downingtown Area School District v. Chester County Board of Assessment Appeals,
913 A.2d 194 (Pa. 2006).       In Downingtown the Supreme Court held that “the
Uniformity Clause does not require equalization across all sub-classifications of real
property.” Trial Ct. Op. at 7. Taxpayers maintain that the Downingtown Court was
merely distinguishing the United States (U.S.) Constitution’s Equal Protection Clause
from the Pennsylvania Constitution’s Uniformity Clause. However, this Court in
Weissenberger explained the significance of the Downingtown holding in relation to
the Pennsylvania Constitution’s Uniformity Clause.         The Weissenberger Court
explained:

             Our Supreme Court consistently interprets the Uniformity
             Clause as precluding real property from being divided into
             different classes for purposes of systematic assessment:
             ‘The [Pennsylvania Constitution] [requires] all real estate to
             be treated as a single class entitled to uniform treatment.’
             Clifton [v. Allegheny Cnty.], . . . 969 A.2d [1197,] 1212
             [(Pa. 2009)]. Moreover, while the Court has held that Equal
             Protection and Uniformity claims pertaining to matters of
             taxation are analyzed coterminously, the Court has
             recognized that the U.S. Constitution does not require

                                           4
            equalization across all potential subclassifications of real
            property, noting that federal standards contemplate that
            similarly situated taxpayers should not be deliberately
            treated differently by tax authorities. Downingtown . . . .
            Thus, while noting that real property cannot be
            subdivided into classes for purposes of assessment and
            taxation,     the    Court     held     that     meaningful
            subclassifications can be considered as a ‘component of
            the overall evaluation of uniform treatment in the
            application of the taxation scheme. . . . [To do
            otherwise] would represent an impermissible departure
            from federal equal protection jurisprudence . . . [.]’ Id. .
            . . at 200.

Weissenberger, 62 A.3d at 506-07 (emphasis added). The Court concluded:

            [A] [s]chool [d]istrict is expressly authorized to initiate
            assessment appeals, and it is not an entity clothed with the
            power to revise assessments or assessment ratios, such that
            lodging an appeal constitutes an impermissible spot
            reassessment. Moreover, . . . adopting a methodology that
            narrows the class of properties evaluated for appeal
            based upon considerations such as financial and
            economic thresholds or by classifications of property do
            not as a matter of law demonstrate deliberate,
            purposeful discrimination.

Id. at 508-09 (emphasis added). Thus, we hold that the Springfield II Court did not
misinterpret Downingtown, and the trial court properly relied thereon.

                             Deliberate Discrimination
            Taxpayers further declare that the UMASD selected its properties based
on their owners’ lack of political power, and thereby deliberately discriminated
against an underrepresented group violating uniformity. See Downingtown. We
acknowledge that Taxpayers alleged in their Complaint: “On information and belief,
[UMASD] has failed to appeal the assessments of single family homes because
many if not all are owned by residents who vote in local elections and it would be
politically unpopular to appeal such voters’ property assessments.” Complaint ¶53;

                                          5
Reproduced Record (R.R.) at 16a (emphasis added).         However, Taxpayers also
alleged:

            48. Upon information and belief, pursuant to the contract
            between the School Board and Keystone [Realty], the
            School Board agreed to pay Keystone [Realty] a
            contingency fee of 25% of any increased tax revenue
            [UMASD] generates through a Keystone [Realty]-assisted
            appeal.
            49. This contingency fee arrangement creates for Keystone
            [Realty] an economic interest in recommending that
            [UMASD] target for appeal high-value properties, in
            disregard of the requirements of the Uniformity Clause.
            50. This interest creates a direct conflict between Keystone
            [Realty]’s interest in maximizing its contingency fee and
            [UMASD’s] obligations to abide by the Uniformity Clause.
            For example, rather than selecting properties for appeal to
            further uniformity and ensure that no taxpayer pays more or
            less than its proportionate share of the cost of government,
            this arrangement rewards targeting for appeal larger,
            higher value commercial properties and not appealing
            lower value, lower assessed single family homes.
            51. In fact, with the assistance of Keystone [Realty],
            [UMASD] has embarked on precisely such an
            unconstitutional assessment appeal scheme. Rather than
            appeal the assessments of real properties with assessment-
            to-market value ratios that are substantially lower than the
            common-level ratio, which would further uniformity,
            [UMASD], upon information and belief based on
            recommendations of Keystone [Realty], has (a) failed to
            appeal the assessments of any single family homes; and (b)
            systematically appealed the assessments of commercial
            properties, including multi-family apartment buildings,
            with     values    and     assessment-to-market       ratios
            substantially greater than the single family home
            assessments not being appealed.

R.R. at 14a-15a (emphasis added). “In reviewing preliminary objections, all material
facts averred in the complaint, and all reasonable inferences that can be drawn from
them, are admitted as true. However, a court need not accept as true conclusions of
                                         6
law, unwarranted inferences, argumentative allegations, or expressions of opinion.”
Seitel Data, Ltd. v. Ctr. Twp., 92 A.3d 851, 859 (Pa. Cmwlth. 2014) (citations
omitted). Our Supreme Court has held:

            ‘When a taxpayer believes that he has been subjected to
            unequal taxation . . . he generally must demonstrate that: (1)
            the enactment results in some form of classification; and (2)
            such classification is unreasonable and not rationally related
            to any legitimate state purpose.’ Clifton v. Allegheny Cnty.,
            . . . 969 A.2d 1197, 1211 ([Pa.] 2009) (citing Wilson
            Partners L.P. v. Bd. of Fin. & Revenue, . . . 737 A.2d 1215
            ([Pa.] 1999)). In the absence of classifications that are
            ‘suspect’ or ‘sensitive,’ or that implicate fundamental or
            important rights, classifications are subject to the
            deferential rational basis test. Id. . . . at 1211 n.[]19
            (emphasis added) (citing Commonwealth v. Albert, . . . 758
A.2d 1149 ([Pa.] 2000)).

Weissenberger, 62 A.3d at 506 (emphasis added). Because Taxpayers expressly
alleged that the District was targeting high value properties for the purpose of
increasing revenue, “it is easy to envision a rational basis for [UMASD] taking these
appeals: sufficient increased revenue to justify the costs of appeals. Judicious use of
resources to legally increase revenue is a legitimate governmental purpose.” Id.
Taxpayers did not allege that UMASD selected Taxpayers’ properties based on their
owners’ lack of political power. Accordingly, UMASD’s selection of Taxpayers’
properties did not deliberately discriminate against an underrepresented group
violating uniformity. Id.

                            Trial Court’s Relied-Upon Cases
            Finally, Taxpayers maintain the trial court relied upon cases that do not
support its decision because the cases do not provide taxing districts a wholly
unfettered right of appeal and each case is distinguishable from the facts alleged

                                          7
herein. Specifically, Taxpayers claim that the trial court erred in citing Vees v.
Carbon County Board of Assessment Appeals, 867 A.2d 742 (Pa. Cmwlth. 2005), and
Springfield II to support a school district’s unfettered right to appeal from tax
assessments; and in relying on Vees, In re Springfield School District, 879 A.2d
335 (Pa. Cmwlth. 2005) (Springfield I), Weissenberger and Springfield II because
those cases involved and were determined on facts that are not present herein.
               First, the trial court did not rely on any of the above cases in dismissing
Counts I (Injunctive Relief – UMASD), III (Injunctive relief-Keystone Realty) and
IV (Declaratory Judgment-the District) of the Complaint.3 Rather, the trial court
granted the District’s preliminary objections because Complaint Counts I, III and IV
do not state a cause of action. The trial court opined:

               [Taxpayers] allege that [the District] ha[s] violated the
               Uniformity [C]lause of the Pennsylvania Constitution,
               which provides, inter alia, that ‘all taxes shall be []uniform,
               upon the same class of subjects . . . .’ PA. CONST. art. VIII, §
               I. However, there is no allegation in the Complaint that the
               taxes imposed by UMASD violate the Uniformity Clause of
               the Pennsylvania Constitution. Likewise, there is no
               allegation that the school district’s millage, which is part of
               the overall real estate taxes, applies unequally to all
               assessed properties in the school district.
               The [Law] specifically provides that a taxing authority has
               the right to appeal the assessment of any property to the
               Court of Common Pleas. Simply stated, [Taxpayers’]
               claims concerning inequality in tax assessments and lack of
               uniformity do not state an independent cause of action
               against a school district since school districts do not set tax
               assessments. The [Board] has exclusive jurisdiction of tax
               assessments.
               Furthermore, this case has not been certified as a class
               action. [Taxpayers] state in Paragraph 3 of the Complaint
               that this action is a ‘first-of-its kind in the Commonwealth .

      3
          Count II (Negligence-Keystone Realty) will be discussed below.
                                                8
             . . .’ (Compl. ¶[]3). [Taxpayers] have no statutory or case
             authority to support their unprecedented assertion that there
             is a legal basis for an independent action seeking to enjoin a
             school district from exercising its right to appeal tax
             assessments due to an alleged inequality of tax assessments
             and a lack of uniformity. [Taxpayers] are seeking to avoid
             the statutory procedures established for the adjudication of
             tax assessment appeals.         Issues concerning lack of
             uniformity can be properly raised in the tax assessment
             appeals where the county, township, school district, and
             board of assessment appeals are parties in the case.

Trial Ct. Op. at 3-4. This Court discerns no error in the trial court’s reasoning.
Taxpayers have no basis for bringing a lawsuit against the UMASD for assessing
taxes against Taxpayers in violation of the Pennsylvania Constitution’s Uniformity
Clause when in fact UMASD was not assessing taxes, but rather exercising its
statutory right to appeal from said assessments. In citing the cases that Taxpayers
maintain are inapposite, the trial court was merely reciting the law that when the issue
of appealing from tax assessments in violation of the Pennsylvania Constitution’s
Uniformity Clause has been raised during the litigation of the assessment appeal, the
courts have held that the school district’s actions did not violate the Pennsylvania
Constitution’s Uniformity Clause.
             Taxpayers contend that the trial court erred in relying on Vees and
Springfield II to support a school district’s unfettered right to appeal from tax
assessments because the Downingtown Court held that a “classification [] not based
on any legitimate distinction between the targeted and non-targeted properties, [] is
arbitrary, and thus, unconstitutional.” Id. at 205 (emphasis added). However, the
trial court did not cite the above cases for the proposition that a school district’s right
to appeal from assessments is absolute.            Rather, it relied upon them for the
proposition that where, as here, the school district has reasonable and financial
considerations of increasing its revenue, the methods for identifying properties is
not arbitrary, capricious or discriminatory.

                                               9
             Further, the distinctions Taxpayers seek to make in the above-cited cases
are belied by the Complaint’s allegations.         For example, Taxpayers aver that
Weissenberger does not apply because “[i]n Weissenberger, the school district
selected certain apartment properties for assessment appeals based on a consultant’s
review of all apartment complexes in the district.” Taxpayers’ Br. at 27. “In other
cases, this Court has approved selection methodologies based on the difference
between sale prices and imputed fair market values of properties in the district.” Id.
Taxpayers maintain that

             the record contains no evidence that [UMASD] used any
             methodology for selecting properties for appeal. Rather,
             as alleged in the Complaint, [UMASD] retained Keystone
             [Realty] to recommend commercial properties, such as
             the [Taxpayers’] apartment buildings, for appeals. The
             [District is] not using any criteria. None of this Court’s
             prior cases have approved discrimination without any
             selection criteria for choosing properties for assessment
             appeals.

Id. at 28 (citation omitted; emphasis added). Taxpayers conclude that

             although in some of the earlier cases this Court found no
             deliberate discrimination because the taxing districts acted
             from an economic motivation, that has no bearing on this
             case. . . . [T]he [District] did not have any rational basis for
             choosing only commercial properties for appeal; they did
             so based on the nature of the property and the owners’
             political power, in violation of the Uniformity Clause.
Id. at 32.

             However, Taxpayers expressly alleged:
             47. At a meeting of the School Board on June 5, 2011, the
             [UMASD], through its Board, voted to hire Keystone
             [Realty] to target properties for [UMASD] appeals.
             48. Upon information and belief, pursuant to the contract
             between the School Board and Keystone [Realty], the
             School Board agreed to pay Keystone [Realty] a
             contingency fee of 25% of any increased tax revenue the
                                           10
               School District generates through a Keystone [Realty]-
               assisted appeal.
               49. This contingency fee arrangement creates for Keystone
               [Realty] an economic interest in recommending that
               [UMASD] target for appeal high-value properties, in
               disregard of the requirements of the Uniformity Clause.

R.R. at 15a (emphasis added).         There is no allegation that UMASD requested
Keystone Realty to seek only apartment complexes or properties owned by non-
residential voters. To the contrary, based on Taxpayers’ allegations, which we must
accept as true, increased tax revenue is the motivation behind the consulting
contract, and high value properties were the target. Thus, as Taxpayers’ allegations
do not support their purported distinctions, the cases the trial court cited are
controlling.

                        Exhaustion of Administrative Remedies
               Taxpayers next argue that the trial court erred in dismissing their claims
on the basis of the administrative exhaustion of remedies doctrine. Specifically,
Taxpayers contend that Pennsylvania case law demonstrates that Taxpayers were not
required to pursue their Uniformity Clause challenge in tax assessment appeals, but
instead could bring it as a separate equity action. Taxpayers further assert that
individual assessment appeals cannot address Taxpayers’ constitutional challenge and
an equity action provides a preferable vehicle for their claims. The District rejoins
that the remedies set forth in the Law are the mandatory and exclusive remedies to
raise in assessment appeal matters.
               Section 8854 of the Law provides in relevant part:

               (a) Court of common pleas.--
               (1) Following an appeal to the board, any appellant,
               property owner or affected taxing district may appeal the
               board’s decision to the court of common pleas in the
               county in which the property is located in accordance with
                                            11
42 Pa.C.S. § 5571(b) (relating to appeals generally) and
local rules of court.

(2) In any appeal of an assessment the court shall make the
following determinations:

(i) The market value as of the date the appeal was filed
before the board. In the event subsequent years have been
made a part of the appeal, the court shall determine the
market value for each year.

(ii) The common level ratio which was applicable in the
original appeal to the board. In the event subsequent years
have been made a part of the appeal, the court shall
determine the applicable common level ratio for each year
published by the State Tax Equalization Board on or before
July 1 of the year prior to the tax year being appealed.
....
 (6) In any appeal by a taxable person from an action by the
board, the board shall have the power and duty to present a
prima facie case in support of its assessment, to cross-
examine witnesses, to discredit or impeach any evidence
presented by the taxable person, to prosecute or defend an
appeal in any appellate court and to take any other
necessary steps to defend its valuation and assessment.
....
(9) Nothing in this subsection shall:
(i) Prevent an appellant from appealing a base-year
valuation without reference to ratio.
(ii) Be construed to abridge, alter or limit the right of an
appellant to assert a challenge under [S]ection 1 of Article
VIII of the Constitution of Pennsylvania [the Uniformity
Clause].
(b) Appeals to Commonwealth Court or Supreme
Court.--The board, or any party to the appeal to the court of
common pleas, may appeal from the judgment, order or
decree of the court of common pleas.

                             12
53 Pa.C.S. § 8854 (double emphasis added). Here, UMASD filed appeals from
Taxpayers’ properties’ assessments to the Board. The Board denied the assessment
appeals from which UMASD appealed to the trial court and which are currently
pending in the trial court. Taxpayers in their Answers and New Matter raised the
Uniformity Clause issue as they were permitted to do by statute.
               Moreover, our Supreme Court has held that in order to obtain equity
jurisdiction, taxpayers must: (1) raise a substantial constitutional issue, and (2) lack
an adequate remedy through the administrative appeal process. Beattie v. Allegheny
Cnty., 907 A.2d 519 (Pa. 2006). Although the Beattie Court acknowledged that a
substantial constitutional question historically exists in a facial challenge to the
relevant taxing statute, the Court held that it could also be based solely upon the
manner in which the governing taxing statute is applied. Id.
               Here, however, Taxpayers have not raised a constitutional challenge to a
taxing statute, ordinance or the application thereof.                    Rather, Taxpayers are
challenging UMASD’s right to appeal tax assessments. Thus, Taxpayers cannot meet
the first requirement. It should be noted that Taxpayers did not raise a constitutional
challenge to the assessment appeals statute. As explained above, while UMASD’s
right to appeal assessments is not unfettered, the case law establishes that where, as
here, a school district has reasonable and financial considerations of increasing its
revenue, their actions do not violate the Uniformity Clause. Weissenberger. It is the
existence of a substantial question of constitutionality, not the mere allegation
thereof, that is required.4 Beattie; Kowenhoven v. Allegheny Cnty., 901 A.2d 1003
(Pa. 2006); Rochester & Pittsburgh Coal Co. v. Bd. of Assessment & Revision of

       4
          Preliminary objections are before us. However, as explained above, the Complaint does
not support the existence of a substantial constitutional question as the allegations do not establish
that UMASD deliberately discriminated against an underrepresented group. Had Taxpayers’
allegations supported this averred conclusion, further inquiry would have been required.
                                                 13
Taxes of Indiana Cnty., 266 A.2d 78 (Pa. 1970). Accordingly, the trial court properly
dismissed Taxpayers’ Complaint.

                                       Negligence
                                          Duty
             Lastly, Taxpayers argue that the trial court improperly dismissed their
negligence claim because Keystone Realty owed Taxpayers a duty. The District
rejoins that Keystone Realty owed no duty of care to Taxpayers; thus, no negligence
cause of action exists.
             Essentially, both parties agree that Althaus v. Cohen, 756 A.2d
1166 (Pa. 2000) is the controlling law on this issue.5 Our Supreme Court in Althaus
held that “[t]he primary element in any negligence cause of action is that the
defendant owes a duty of care to the plaintiff.” Id. at 1168. The Court explained that

             [t]he determination of whether a duty exists in a particular
             case involves the weighing of several discrete factors which
             include: (1) the relationship between the parties; (2) the
             social utility of the actor’s conduct; (3) the nature of the risk
             imposed and foreseeability of the harm incurred; (4) the
             consequences of imposing a duty upon the actor; and (5) the
             overall public interest in the proposed solution.

Id. at 1169.6 Concerning the first duty factor, Taxpayers assert that although there is
no contract between the parties there is a relationship based on the analysis in Sharpe
v. St. Luke’s Hospital, 821 A.2d 1215 (Pa. 2003). In Sharpe, Federal Express had a
contract with St. Luke’s Hospital (St. Luke’s) for drug testing its employees. Sharpe,
a Federal Express employee, sued St. Luke’s for its negligence in handling her test
sample leading to a false positive result for cocaine. The Sharpe Court found that St.

      5
        Both parties cited cases which quote Althaus to support their respective positions.
      6
         We will summarize the parties’ arguments concerning each factor before addressing
whether a duty exists.
                                            14
Luke’s owed a duty of care to the employee notwithstanding that she did not have a
contract with St. Luke’s. The Sharpe Court held: “Specifically, [the employee]
personally presented herself to [St. Luke’s], which was aware of the purpose of the
urine screening; [St. Luke’s], in turn, should have realized that any negligence with
respect to the handling of the specimen could harm Sharpe’s employment.” Id. at
1219.
             The District relies on Wisniski v. Brown & Brown Insurance Co. of
Pennsylvania, 906 A.2d 571 (Pa. Super. 2006) to support its position that no
relationship exists between Taxpayers and Keystone Realty. The Wisniski Court held
that there are three categories of relationships: (1) an ordinary, arm’s-length
relationship; (2) an agency relationship; and (3) a confidential relationship. Id. The
District maintains that because the contract between UMASD and Keystone Realty
does not contain any obligation on the part of Keystone Realty to Taxpayers, none of
the three categories exists.
             In regard to the second duty factor, Taxpayers argue that because
Keystone Realty acted in its own self-interest, i.e., maximizing its contingency fee,
there can be no social utility in selecting Taxpayers’ properties.      The District,
however, avers that the social utility in Keystone Realty assisting UMASD to
increase revenue serves a legitimate government interest. “Regarding the third factor,
duty arises only when one engages in conduct which foreseeably creates an
unreasonable risk of harm to others.” R.W. v. Manzek, 888 A.2d 740, 747 (Pa. 2005).
Taxpayers argue that since Keystone Realty targeted their properties in violation of
the Uniformity Clause, Keystone Realty should have foreseen the harm to Taxpayers’
constitutional rights. The District retorts that Keystone Realty’s actions did not
create an unreasonable risk of harm to others because it was merely consulting with
UMASD regarding the property assessment appeals.

                                         15
             The fourth duty factor weighs the consequence of imposing such a duty
upon the actor. Taxpayers argue that imposing a duty on Keystone Realty to make
only lawful recommendations has only positive consequences. The District maintains
that imposing a duty on Keystone Realty to all taxpayers would be absurd, as it would
prohibit UMASD from consulting with Keystone Realty, thus, preventing UMASD
from participating in the permissible practice of appealing from assessments. Finally,
Taxpayers argue that imposing a duty on Keystone Realty would promote the overall
public interest, while the District counters it would not be in the public interest to
prevent UMASD from engaging in a process expressly permitted by both statute and
case law.
            The trial court found Keystone Realty owed no duty to Taxpayers
because “[t]here was no relationship between the parties whatsoever. [Taxpayers]
and Keystone [Realty] are not contracting parties. The agreement between UMASD
and Keystone [Realty] does not contain any obligation on the part of Keystone
[Realty] to [Taxpayers].” Trial Ct. Op. at 8. Based on the three categories of
relationships espoused in Wisniski, we agree. Moreover, we hold that the remaining
factors established in Althaus weigh in Keystone Realty’s favor. There is a social
utility in Keystone Realty’s assistance to UMASD to increase revenue that serves a
legitimate government interest. The mere consultation with a school district does not
create an unreasonable risk of harm to others. Imposing a duty on Keystone Realty
to all taxpayers would prohibit UMASD from consulting with Keystone Realty, thus,
preventing UMASD from participating in the practice of filing assessment appeals.
Finally, it would not be in the public interest to bar UMASD from engaging in a
process expressly permitted by statute and case law. Accordingly, the trial court
properly dismissed Taxpayers’ negligence claim on the basis that Keystone Realty
did not owe Taxpayers a duty of care.

                                         16
                                  Economic Loss Doctrine
              Taxpayers argue that assuming Keystone Realty did owe Taxpayers a
duty of care, the trial court erred in dismissing their negligence claim on the basis of
the economic loss doctrine. Specifically, Taxpayers contend that the trial court erred
in ruling that Taxpayers failed to allege that Keystone Realty caused Taxpayers any
injury, i.e., Taxpayers did not allege any property damage or personal injury.
Keystone Realty rejoins that since the only potential losses are economic due to the
possible increased assessments, the trial court properly considered the economic loss
doctrine.
              “The economic loss doctrine provides, ‘no cause of action exists for
negligence that results solely in economic damages unaccompanied by physical
injury or property damage.’ Adams v. Copper Beach Townhome C[mtys.], L.P., 816
A.2d 301, 305 (Pa.[]Super.[]2003).” Excavation Techs., Inc. v. Columbia Gas Co. of
Pa., 985 A.2d 840, 841 n.3 (Pa. 2009). Despite Taxpayers claim that they suffered
the loss of their constitutional rights and that they had to defend against the
assessment appeals to the Board and the trial court, we hold that the trial court
properly dismissed Taxpayers’ negligence claim for failure to allege a proper injury.7

                                          Conclusion
              Because Taxpayers’ Complaint fails to state a claim for which relief can
be granted, we hold that the trial court properly sustained the District’s preliminary
objections and dismissed the Complaint.

       7
         The District adds a final argument in the event this Court finds that Keystone Realty owed
Taxpayers a duty of care. The District claims that under the gist of the action doctrine, a party
cannot base an action in tort on actions that arose in the course of the parties’ contractual
relationship. See Bruno v. Erie Ins. Co., 106 A.3d 48 (Pa. 2014). Because there was no contract
between Taxpayers and Keystone Realty, we hold that the gist of the action doctrine does not apply.
                                                17
For all of the above reasons, the trial court’s order is affirmed.

                           ___________________________
                           ANNE E. COVEY, Judge

                              18
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Valley Forge Towers Apartments N,     :
LP; Morgan Properties Abrams Run      :
Owner LP; KBF Associates, LP; Gulph   :
Mills Village Apartments LP; and      :
The Lafayette at Valley Forge LP,     :
                         Appellants   :
                                      :
                  v.                  :
                                      :
Upper Merion Area School District     :   No. 1960 C.D. 2014
and Keystone Realty Advisors, LLC     :

                                    ORDER

            AND NOW, this 10th day of September, 2015, the Montgomery County
Common Pleas Court’s October 9, 2014 order is affirmed.

                                    ___________________________
                                    ANNE E. COVEY, Judge