Court Opinion

ID: 9925940
Source: CourtListenerOpinion
Date Created: 2024-01-23 15:09:43.475058+00
Date Added: 2024-06-11T09:21:52.286397
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Chester Upland School District,               :
                       Appellant              :
                                              :
                   v.                         :       No. 1272 C.D. 2022
                                              :       Argued: December 4, 2023
103 Commerce Drive ILP, LLC                   :

BEFORE:      HONORABLE ANNE E. COVEY, Judge
             HONORABLE STACY WALLACE, Judge
             HONORABLE MARY HANNAH LEAVITT, Senior Judge

OPINION
BY SENIOR JUDGE LEAVITT                               FILED: January 23, 2024

             Chester Upland School District (School District) has appealed an order
of the Court of Common Pleas of Delaware County (trial court) sustaining the
preliminary objections of 103 Commerce Drive ILP, LLC (Property Owner) in the
nature of a demurrer to the School District’s amended complaint. The School
District seeks to recover from Property Owner the amount in taxes it would have
paid but for the County’s delay in revising Property Owner’s assessment. The trial
court dismissed the School District’s amended complaint for declaratory and
equitable relief for the stated reason that the School District had a statutory remedy
to challenge Property Owner’s assessment. We affirm the trial court.
             On March 26, 2021, the School District filed an amended complaint
that alleged the following. Property Owner owns real property located at 103
Commerce Drive, Chester Township (Property). In February 2020, the School
District learned that the Property had been improved with the construction of a new
commercial building approximately 254,000 square feet in size. The School District
notified the Delaware County Assessor’s Office about the improvement. Thereafter,
the County increased the Property’s tax assessment from $724,000 to $11,671,430
(consisting of $724,000 for the land and $10,947,430 for the building), effective
March 1, 2020. The School District’s amended complaint alleged that even though
the building was completed on January 27, 2016, the property’s assessment reflected
only the value of the Property’s land until March 1, 2020, when the County Assessor
revised the assessment.
             Count I of the amended complaint asserted an unjust enrichment claim
on the basis that Property Owner “has passively received the benefit of the underpaid
school taxes during the period from at least January 27, 2016 to March 1, 2020.”
Amended Complaint, ¶23; Reproduced Record at 4a (R.R. ___). The amended
complaint alleged that during that period, Property Owner paid approximately
$80,000 in school taxes “instead of the approximately $1,280,000 of total school
taxes which rightfully should have been paid,” and Property Owner knew, or should
have known, that it was underpaying school taxes. Amended Complaint, ¶21; R.R.
4a. In retaining “the benefit of the underpaid school taxes,” Property Owner paid
“less than its fair share of the cost of government” including “the cost to maintain a
public education system.” Amended Complaint, ¶¶27, 30, 31; R.R. 5a.
             Count II of the amended complaint asserted a declaratory judgment
claim that Property Owner owed the School District “the correctly calculated
underpaid school taxes due” from January 27, 2016, to March 1, 2020, “based on the
assessment figure for the Property established as of March 1, 2020[.]” Amended
Complaint at 9; R.R. 9a. Count II requested the court to declare the amount of taxes
owed by Property Owner to School District from January 27, 2016, to March 1,
2020.
             In response, Property Owner filed preliminary objections demurring to
the amended complaint on several grounds. First, Property Owner asserted that

                                          2
because the amended complaint did not allege that the School District conferred a
benefit on Property Owner, it did not state a claim for unjust enrichment. Second,
unjust enrichment is a common law remedy that was precluded by the School
District’s statutory remedy. Specifically, the Consolidated County Assessment Law
(Assessment Law),1 53 Pa. C.S. §§8801–8868, has established the exclusive
procedure for tax assessments and their appeals by taxpayers and taxing authorities.
The County assessed the Property at $724,000 for the period from January 27, 2016,
to March 1, 2020, and Property Owner paid the taxes owed in accordance with the
Property’s assessment. The School District cannot employ equity to revise the
Property’s assessment for that period of time because the statutory procedure for
revising assessments is exclusive. For the same reasons, Property Owner asserted
that the amended complaint did not state a claim under the Declaratory Judgments
Act, 42 Pa. C.S. §§7531-7541.
               By order of November 7, 2022, the trial court sustained the preliminary
objections and dismissed the School District’s amended complaint with prejudice.
In its PA.R.A.P. 1925(a) opinion, the trial court explained that an action for unjust
enrichment originates from the theory of quasi-contract or contract implied in law,
where the defendant’s acceptance and retention of benefits conferred by the plaintiff
would be inequitable without payment of value. Trial Court Op. at 6 (citing Toppy
v. Passage Bio, Inc., 285 A.3d 672 (Pa. Super. 2022)). The School District’s
amended complaint did not allege that it conferred a cognizable benefit on Property
Owner. Rather, the amended complaint alleged that Property Owner passively
received a benefit from the delay in the Property’s revised assessment. However, it

1
  The Consolidated County Assessment Law enacted on October 27, 2010, effective January 1,
2011, applies to the counties of the second class A, third, fourth, fifth, sixth, seventh and eighth
classes. 53 Pa. C.S. §8801(b)(1)(i).
                                                 3
was not the School District that provided this “benefit” to Property Owner, which
the trial court concluded was a necessary element for an unjust enrichment claim.
              The trial court further opined that where, as here, a statutory remedy
exists by which to challenge a tax assessment, the School District could not invoke
equity. In support, the trial court cited Section 8844(c) of the Assessment Law, 53
Pa. C.S. §8844(c) (regarding annual assessment appeal deadline), and Section 15 of
the Local Tax Collection Law,2 72 P.S. §5511.15 (tax collector prohibited from
receiving payment of taxes not assessed). Given this statutory scheme, the trial court
dismissed the School District’s action for failing to state a claim upon which relief
can be granted.
              The School District appealed to this Court.
              On appeal,3 the School District argues that the trial court erred in
sustaining Property Owner’s demurrer. It contends that Property Owner “passively
received a benefit” that would be unconscionable to retain. The School District
argues that it has adequately pleaded the claim of unjust enrichment by alleging that
during the time period in question, Property Owner “underpaid (by approximately
$1,200,000) the rightful amount of school taxes which should have been due” if the
Property “had been assessed fairly and correctly.” School District Brief at 9. The
School District further argues that as of February of 2020, it did not have a statutory
remedy because the Assessment Law, cited by the trial court, does not authorize a
retroactive assessment to 2016 when the building was constructed. Further, the
statutory deadline for the School District to appeal the Property’s assessment for

2
  Act of May 25, 1945, P.L. 1050, as amended.
3
  “Where a trial court dismisses a complaint based on preliminary objections, this Court’s review
is limited to determining whether the trial court committed an error of law or an abuse of
discretion.” Kittrell v. Watson, 88 A.3d 1091, 1095 (Pa. Cmwlth. 2014).
                                               4
each tax year from 2016 through 2019 had lapsed as of February 2020 “through no
fault of its own.” School District Brief at 15.
                  In response, Property Owner argues that the trial court did not err. The
School District provided no work, service, or other benefit to Property Owner, which
is required for an unjust enrichment claim at common law. As found by the trial
court, even if Property Owner’s payment of school taxes was lower than it should
have been, this so-called “benefit” was not conferred by the School District.
Property Owner further argues the procedures in the Assessment Law are mandatory
and for sound policy reasons. The annual certification and assessment roll provided
in the Assessment Law provide certainty both to taxing authorities and to property
owners. Permitting the taxing authorities to “short-circuit this statutory scheme” in
an equitable proceeding would eliminate this certainty. Property Owner Brief at 13.
Lest there be any doubt, Section 15 of the Local Tax Collection Law4 makes it
unlawful to collect tax payments that have not been duly assessed. Simply, School
District’s claims were beyond equitable or declaratory relief.

4
    Section 15 states as follows:
          It shall not be lawful for any county treasurer, county commissioner or any tax
          collector, nor for any other person, on his or their behalf, to receive payment or give
          any receipt for the payment of any taxes that have not been duly assessed and
          returns of said assessment made according to law, nor shall any such treasurer,
          commissioner or tax collector, or other person on his or their behalf, receive
          payment or give any receipt for the payment of any taxes, from the collection of
          which the tax collector has been exonerated according to law. But where the tax
          collector has been so exonerated, such taxes shall remain payable to the taxing
          district. Except as hereinafter otherwise provided, it shall not be lawful for any
          county commissioner, or for any other person on his behalf, to add any name to the
          duplicate return or list of taxables made or furnished by the assessor or assistant
          assessors of any township, ward or district.
72 P.S. §5511.15 (emphasis added).

                                                    5
             Enumerated preliminary objections may be filed to any pleading and
include the “legal insufficiency of a pleading (demurrer)[.]” PA.R.CIV.P. 1028(a)(4).
When ruling on preliminary objections in the nature of a demurrer, the trial court
must accept as true all well-pleaded allegations of material fact and all inferences
reasonably deduced therefrom, but the court is not required to accept conclusions of
law or expressions of opinion. Russell v. Donnelly, 827 A.2d 535, 536 (Pa. Cmwlth.
2003). Because a demurrer results in the dismissal of a suit, it should be sustained
only in cases that are clear and free from doubt and only when it appears with
certainty that the law permits no recovery under the allegations pleaded. Id.

             We start with a review of the Assessment Law, which governs the
taxation of real property by school districts. Section 8811(a) states, in pertinent part,
that
             all subjects and property made taxable by the laws of this
             Commonwealth for county, city, borough, town, township and
             school district purposes shall, as provided in this chapter, be
             valued and assessed at the annual rates, including all . . . [r]eal
             estate . . . [and] [a]ll other things now taxable by the laws of this
             Commonwealth for taxing districts.

53 Pa. C.S. §8811(a) (emphasis added). The county assessment office must prepare
and submit to the assessment board “[a]nnually, on or before the first day of July,”
an assessment roll of properties subject to, or exempt from, local taxation. 53 Pa.
C.S. §8841(a). Moreover,
             [t]he county assessment office is authorized to make additions
             and revisions to the assessment roll at any time in the year to
             change the assessments of existing properties pursuant to section
             8817 (relating to changes in assessed valuation) or add properties
             and improvements to property mistakenly omitted from the
             assessment roll as long as notice is provided in accordance with
             section 8844 (relating to notices, appeals and certification of

                                           6
             values). All additions and revisions shall be a supplement to the
             assessment roll for levy and collection of taxes for the tax year
             for which the assessment roll was originally prepared.

53 Pa. C.S. §8841(c) (emphasis added). This notice must be given to each record
property owner and “the affected taxing districts.” 53 Pa. C.S. §8844(b). Any
person aggrieved by the assessment, including a taxing district, may file an appeal
to the board within 40 days of the date of the notice. Id. Further, any appeal must
be filed by the “annual appeal deadline,” which is “September 1 or the date
designated by the county commissioners[.]” 53 Pa. C.S. §8844(c)(1).
             The School District contends that Property Owner “underpaid (by
approximately $1,200,000) the rightful amount of school taxes which should have
been due” had the Property “been assessed fairly and correctly.” School District
Brief at 9. The County Assessor’s Office assessed the Property at $724,000 for the
period from January 27, 2016, to March 1, 2020, at which point in time it increased
the assessment to $11,671,430 to include the value of the building. The School
District did not appeal the assessment for the tax years of 2016 through 2020 by the
September deadline. A commercial building of approximately 254,000 square feet
in size is difficult to hide, and it did not appear overnight. The School District asserts
that it did not learn of the improvement until February of 2020 but this does not
excuse its failure to meet the statutory appeal deadline.
             The Local Tax Collection Law prohibits “any tax collector” from
“receiv[ing] payment or giv[ing] any receipt for the payment of any taxes that have
not been duly assessed.” 72 P.S. §5511.15. The Property’s assessment of $724,000
was fixed and lawful for the period 2016 to 2020, and it would be unlawful for “any
tax collector” to receive any tax payment not assessed in accordance with law.
Essentially, the School District asks the chancellor sitting in equity to order an

                                            7
unlawful act, which cannot be done. Pennsylvania Parent Assistance Authority v.
Sloan, 389 A.2d 1208, 1210 (Pa. Cmwlth. 1978).

             The statutory remedies of the Assessment Law likewise preclude the
School District’s declaratory judgment count. Section 7541 of the Declaratory
Judgments Act states that the purpose of that Act is “to settle and to afford relief
from uncertainty and insecurity with respect to rights, status, and other legal
relations, and is to be liberally construed and administered.” 42 Pa. C.S. §7541(a).
Generally, declaratory relief is available even where other procedures are available.
42 Pa. C.S. §7541(b). However, Section 7541(c) states, in relevant part, as follows:
             (c) Exceptions.--Relief shall not be available under this
             subchapter with respect to any:
                                          ****
                   (2) Proceeding within the exclusive jurisdiction of a
                   tribunal other than a court.

42 Pa. C.S. §7541(c) (emphasis added).
             Where the legislature provides a statutory remedy, that remedy “must
be strictly pursued and such remedy is exclusive . . . unless the jurisdiction of the
courts is preserved thereby.” Lashe v. Northern York County School District, 417
A.2d 260, 263-64 (Pa. Cmwlth. 1980). “A non-exclusive or permissive statutory
remedy is present where the [l]egislature specifically provides that a person may
proceed under the statute or may go to the courts.” Id. at 263. Otherwise, a statutory
remedy is “mandatory and exclusive.” Id.

             The Assessment Law procedures and remedies are mandatory and
exclusive. In Deigendesch v. Bucks County, 482 A.2d 228, 233 (Pa. 1984), the
Supreme Court held that the common pleas court lacked jurisdiction to hear a
declaratory judgment action brought to challenge the assessment of rollback taxes,

                                          8
explaining that an appeal to the board of assessment appeals is a mandatory and
exclusive remedy. Likewise, here, an appeal to the Delaware County Board of
Assessment is the exclusive means by which the School District can challenge any
tax assessment in its district. Thus, the School District cannot challenge the
Property’s tax assessment by way of a declaratory judgment action.

             The School District’s amended complaint did not state a claim upon
which relief can be granted. The School District had a remedy under the Assessment
Law to challenge the assessment value for the Property, which precludes declaratory
and equitable relief. The trial court did not err in sustaining Property Owner’s
preliminary objections in the nature of a demurrer and dismissing the School
District’s amended complaint. Accordingly, we affirm the trial court’s November
7, 2022, order.

                           ____________________________________________
                           MARY HANNAH LEAVITT, President Judge Emerita

                                        9
        IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Chester Upland School District,         :
                       Appellant        :
                                        :
                 v.                     :       No. 1272 C.D. 2022
                                        :
103 Commerce Drive ILP, LLC             :

                                   ORDER

           AND NOW, this 23rd day of January, 2024, the order of the Court of
Common Pleas of Delaware County, dated November 7, 2022, in the above-
captioned matter, is AFFIRMED.

                        ____________________________________________
                        MARY HANNAH LEAVITT, President Judge Emerita