In re Coatesville Area Sch. Dist.

244 A.3d 373

IN RE: Appeal of COATESVILLE AREA SCHOOL DISTRICT from the Decision of the Chester County Board of Assessment Appeals for the Property Located at 50 South First Avenue, City of Coatesville, Chester County, Pennsylvania, Property Tax Parcel No. 16-05-0229.0000

Appeal of: Coatesville Area School District

No. 7 MAP 2020

Supreme Court of Pennsylvania.

Argued: September 16, 2020

Decided: January 20, 2021

OPINION

CHIEF JUSTICE SAYLOR

In this appeal by allowance, two taxing districts undertook parallel challenges to a property's partial tax exemption. We consider whether res judicata and collateral estoppel preclude merits disposition of the second taxing district's appeal to the Commonwealth Court, where the first district elected not to appeal to that court.

I. Background

Appellee Huston Properties, Inc. ("Taxpayer"), owns the subject property, a historically significant building in Coatesville, Chester County (the "Property"). In 2013, Taxpayer, claiming to be a charitable institution, sought tax-exempt status for the Property for the 2014 tax year. After a hearing, the Chester County Board of Assessment Appeals granted a partial exemption of 72%, reasoning that that portion of the Property was used for charitable purposes. It thus reduced the Property's assessment from $954,450 to $267,250.¹

On October 31, 2013, the City of Coatesville appealed that decision to the Chester County Court of Common Pleas, which hears tax assessment appeals de novo . See Green v. Schuylkill Cty. Bd. of Assessment Appeals , 565 Pa. 185, 195, 772 A.2d 419, 425 (2001) ; 53 Pa.C.S. § 8854(a)(1).² In its appeal, the City challenged the Property's partially-tax-exempt status. The appeal was docketed at No. 2013-10761 (the "City's case"). Six days later, the Coatesville Area School District – another taxing authority encompassing the Property – lodged its own appeal, also challenging the Property's partially-tax-exempt status. That appeal was docketed at 2013-10936 (the "School District's case").

On December 31, 2013, the School District filed a notice of intervention in the City's case. See 53 Pa.C.S. § 8855 (giving taxing districts the right to appeal assessments within its jurisdiction, and to participate in assessment appeals initiated by others). In January 2015, the common pleas court, per Judge Carmody, issued an order consolidating the appeals for trial, and a consolidated trial was ultimately held in November of that year. By that time, Senior Judge Shenkin was presiding over the case, and although he expressed uncertainty as to whether the consolidation order applied only to the actual hearing or to the cases as a whole, see N.T., Nov. 17, 2015, at 15, in the post-trial timeframe he treated it as applying only to the trial. Thus, in resolving the matters, he issued two separate but identical orders, one for each of the appeals, rather than a single order with a double caption.³ In the orders, he affirmed the Board's grant of a partial exemption and its assessment figure of $267,250.

Both the City and the School District appealed to the Commonwealth Court, and Taxpayer cross-appealed as to each, seeking fully-exempt status for the Property. See 53 Pa.C.S. § 8854(b) (authorizing such appeals). The intermediate court consolidated the four appeals and designated the City and School District as the appellants.

In a memorandum decision, the Commonwealth Court vacated and remanded to the trial court for more specific findings to support the partial tax exemption. The appellate court expressed that the common pleas court should have set forth its findings and legal conclusions as to the specific factors discussed in Hospital Utilization Project v. Commonwealth , 507 Pa. 1, 22, 487 A.2d 1306, 1317 (1985), as well as the elements reflected in Section 5 of the Institutions of Purely Public Charity Act, i.e. , 10 P.S. § 375(b). See In re City of Coatesville , Nos. 511, 530, 607, 608 C.D. 2016, 2017 WL 631821, at *2-*3 (Pa. Cmwlth. Feb. 16, 2017).

On remand, the trial court set forth particularized findings and conclusions, and re-affirmed its earlier decision assessing the Property at $267,250. It issued two opinions to this effect on the same day. The opinions were, again, substantively identical, the only difference being that the captions reflected different docket numbers: one for the City's case, and the other for the School District. At this juncture, the City elected not to appeal to the Commonwealth Court. For its part, the School District appealed the ruling in its own case, but it did not appeal the identical, simultaneous ruling which contained the City's docket number.

Taxpayer moved to quash the School District's appeal. The Commonwealth Court granted the motion and dismissed the appeal in a published decision. See In re Coatesville Area Sch. Dist. , 216 A.3d 539 (Pa. Cmwlth. 2019).⁴ The court observed that the common pleas court's ruling in the City's case became final after no party appealed it. Because the School District had intervened in that matter, the court continued, it was a party to those proceedings. With that premise, the court found that res judicata , relating to claim preclusion, and collateral estoppel, relating to issue preclusion, barred it from reaching the merits. See id . at 542-43. Additionally, the court noted that a given property can only have one assessed value regardless of how many taxing districts have authority to tax it. The court suggested that an "absurd result" could ensue if the assessment figure ultimately reached on appeal in the School District's case were to differ from the trial court's final, unappealed assessment in the City's case, i.e. , $267,250. Id . at 544.

This Court granted further review to consider whether the Commonwealth Court acted properly in invoking the doctrines of res judicata and collateral estoppel. See In re Coatesville Area Sch. Dist. , ––– Pa. ––––, 224 A.3d 1090 (2020) (per curiam ).

II. Preclusion doctrines

Res judicata – literally, a thing adjudicated – is a judicially-created doctrine. See Estate of Bell , 463 Pa. 109, 113, 343 A.2d 679, 681 (1975). It bars actions on a claim, or any part of a claim, which was the subject of a prior action, or could have been raised in that action. See R/S Financial Corp. v. Kovalchick , 552 Pa. 584, 588, 716 A.2d 1228, 1230 (1998) ; Balent v. City of Wilkes-Barre , 542 Pa. 555, 563, 669 A.2d 309, 313 (1995). This Court has explained that

[r]es judicata, or claim preclusion, prohibits parties involved in prior, concluded litigation from subsequently asserting claims in a later action that were raised, or could have been raised, in the previous adjudication. The doctrine of res judicata developed to shield parties from the burden of re-litigating a claim with the same parties, or a party in privity with an original litigant, and to protect the judiciary from the corresponding inefficiency and confusion that re-litigation of a claim would breed.

Wilkes ex rel. Mason v. Phoenix Home Life Mut. Ins. Co. , 587 Pa. 590, 607, 902 A.2d 366, 376 (2006) (citation omitted); see also R/S Financial , 552 Pa. at 588, 716 A.2d at 1230 ("The purposes of the rule are the protection of the litigant from the dual burden of relitigating an issue with the same party or his privy and the promotion of judicial economy through prevention of needless litigation." (quoting Foster v. Mut. Fire, Marine & Inland Ins. Co. , 544 Pa. 387, 404, 676 A.2d 652, 661 (1996) )).⁵

Four elements common to both actions, sometimes termed the "four identities," see, e.g. , Estate of Tower , 463 Pa. 93, 100, 343 A.2d 671, 674 (1975), must be present for res judicata to apply: "an identity of issues, an identity of causes of action, identity of persons and parties to the action, and identity of the quality or capacity of the parties suing or being sued." In re Iulo , 564 Pa. 205, 210, 766 A.2d 335, 337 (2001) (citing Safeguard Mut. Ins. Co. v. Williams , 463 Pa. 567, 574, 345 A.2d 664, 668 (1975) ).

Collateral estoppel is similar in that it bars re-litigation of an issue that was decided in a prior action, although it does not require that the claim as such be the same. For example, if, in a breach of contract action, the defendant asserts that the contract is invalid because of fraud, but the contract is ruled valid and the defendant is found liable, in a future lawsuit against the same party alleging a separate breach of the same contract the defendant is precluded from asserting the invalidity of the contract based on fraud. See RESTATEMENT ( SECOND ) OF JUDGMENTS § 27, cmt. a, illus. 2 (1982).

Collateral estoppel will only apply where: the issue is the same as in the prior litigation; the prior action resulted in a final judgment on the merits; the party against whom the doctrine is asserted was a party or in privity with a party to the prior action; and the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior action. See Rue v. K-Mart Corp. , 552 Pa. 13, 17, 713 A.2d 82, 84 (1998). In some renditions, courts add a fifth element, namely, that resolution of the issue in the prior proceeding was essential to the judgment. See, e.g. , Office of Disciplinary Counsel v. Kiesewetter , 585 Pa. 477, 484, 889 A.2d 47, 50-51 (2005).

Collateral estoppel is premised on practical considerations that overlap substantially with those of res judicata . These include avoiding the "cost and vexation" of repetitive litigation, conserving judicial resources, "and, by preventing inconsistent decisions, encourage[ing] reliance on adjudication." Id . at 484, 889 A.2d at 51.

III. Application of the preclusion doctrines

A. Res judicata

Insofar as res judicata is concerned, a straightforward application of that doctrine in this matter is complicated by multiple factors. First, it is not entirely clear whether the third element, the identity of the parties to the two actions, is satisfied. Although the School District filed a...