Lohr v. Saratoga Partners, L.P.

204 A.3d 1028

Fred Lohr and Jolene K. FOUSE, Appellants

v.SARATOGA PARTNERS, L.P. and Huntingdon County Tax Claim Bureau

No. 128 C.D. 2018

Commonwealth Court of Pennsylvania.

Argued December 11, 2018

Decided March 7, 2019

Gregory A. Jackson, Huntingdon, for appellants

Justin K. Houser, Lock Haven, for appellee Saratoga Partners, L.P.

BEFORE: HONORABLE ROBERT SIMPSON, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE CHRISTINE FIZZANO CANNON, Judge

OPINION BY JUDGE FIZZANO CANNON

Fred Lohr and Jolene K. Fouse (together, the Fouses)¹ appeal the October 23, 2017 order of the Court of Common Pleas of Huntingdon County (trial court) denying the Fouses' petition to redeem property sold at an upset tax sale (Petition to Redeem) and holding that the Pennsylvania Real Estate Tax Sale Law's² (RETSL) lack of a post-tax-sale right of redemption does not violate either the Equal Protection Clause of the United States Constitution or Article III of the Pennsylvania Constitution. Upon review, we affirm.

The Fouses are record owners³ of two parcels of real property (the Property) located in Lincoln Township within Huntingdon County, a sixth class Pennsylvania county.⁴ Petition to Redeem at 2; Trial Court Memorandum, 1/5/18 at 2. On or about September 26, 2016, the Huntingdon County Tax Claim Bureau (Tax Claim Bureau) conducted an upset tax sale of the Property pursuant to RETSL. Petition to Redeem at 2. Saratoga Partners, L.P. (Bidder) was the highest bidder at the sale and paid the Tax Claim Bureau a sum of $ 27,795.45 for the Property. Id. Despite the Property being sold pursuant to RETSL, on December 1, 2016, the Fouses filed their Petition to Redeem with the trial court, attempting to avail themselves of the post-tax-sale right of redemption contained in the Municipal Claims and Tax Liens Act (MCTLA).⁵ Petition to Redeem at 1; Bidder's Brief at 1. In their Petition to Redeem, the Fouses claimed that, as "owner[s] of the Property," they "have the right to redeem [it] pursuant to [ 53 P.S. § 7293 ], and [to] extinguish any right, claim, or title held by Saratoga Partners upon payment of any actual costs incurred in connection to the sale." Petition to Redeem at 2. The Fouses also asked the trial court to "issue a [r]ule upon Respondent, Saratoga Partners to show cause why the relief requested ... should not be granted and to issue an [o]rder to ... the Tax Claim Bureau, to withhold any deed it intends to issue to Saratoga Partners until such time as the [r]ule [is] satisfied." Id. at 3. The Fouses filed a Brief in Support of their Petition to Redeem, arguing that RETSL's lack of a post-tax-sale right of redemption impinges on due process and equal protection rights under the United States Constitution and the Pennsylvania Constitution, in addition to violating the Uniformity Clause of the Pennsylvania Constitution. Brief in Support at 5. On October 23, 2017, the trial court issued an order denying the Fouses' Petition to Redeem, due to its finding that RETSL's lack of a post-tax-sale right of redemption does not violate either the Equal Protection Clause of the United States Constitution or Article III of the Pennsylvania Constitution.⁶ Trial Court Order, 10/23/17.

The Fouses timely appealed⁷ and filed a Statement of Errors Complained of on Appeal, alleging that "[t]he failure of [RETSL] to provide taxpayers with a redemption period violates both the Equal Protection Clause of the United State Constitution and Article III of the Constitution of the Commonwealth of Pennsylvania." Huntingdon County Prothonotary Docket Entries at 3; Statement of Errors Complained of on Appeal, 12/18/17.

On January 5, 2018, the trial court issued a memorandum stating the reasons for its October 23, 2017 order. Trial Court Memorandum, 1/5/18 at 1. The trial court held that the Fouses' equal protection challenge warranted rational basis review. Id. at 5 (citing Curtis v. Kline , 542 Pa. 249, 666 A.2d 265, 267-68 (1995) ). The trial court also found that "the dominant purposes of [RETSL] [are] to provide speedier and more efficient procedures for enforcing tax liens and to improve the quality of titles obtained at a tax sale." Id. (quoting Povlow v. Brown , 12 Pa.Cmwlth. 303, 315 A.2d 375, 377 (1974) ). The trial court noted its opinion that the desired post-tax-sale "equity of redemption ... would ... have the effect of making tax titles less attractive than they now are[,] ... thus increasing the chance that the amounts bid at tax sales will be inadequate." Id. at 6 (quoting Povlow , 315 A.2d at 377 n.4 ). The trial court further opined that "[a] speedier, more efficient procedure that enhance[s] the quality of titles proffered at sale certainly promotes the [S]tate's interest in tax collection." Id. The trial court noted that Article III, Section 20 of the Pennsylvania Constitution"specifically permits classification by population." Id. Thus, the trial court held that the Fouses failed to establish that RETSL's lack of a post-tax-sale right of redemption contravenes the right to equal protection under the law. Id. at 6-7 (citing Pa. Liquor Control Bd. v. The Spa Athletic Club , 506 Pa. 364, 485 A.2d 732, 735 (1984) ).

Before this Court,⁸ the Fouses argue that the trial court should have applied strict judicial scrutiny, rather than rational basis review, to determine whether RETSL's lack of a post-tax-sale redemption provision violates the Fouses' rights to due process and equal protection under the law.⁹ Fouses' Brief at 7-8. The Fouses further contend that RETSL's lack of such a provision does not withstand even rational basis review. Id. at 6 & 11.

As a preliminary matter, we note that the Fouses have waived their due process argument for failure to raise it in their statement of errors complained of on appeal. Pursuant to Pennsylvania Rule of Appellate Procedure 1925(b)(4)(vii), "[i]ssues not included in the [s]tatement [of errors complained of on appeal] and/or not raised in accordance with the provisions of this paragraph (b)(4) are waived." Pa. R.A.P. 1925(b)(4)(vii) ; see City of Philadelphia v. Lerner , 637 Pa. 605, 151 A.3d 1020, 1024 (2016) (reaffirming the "well-settled, bright-line rule" that "issues not raised in a Rule 1925(b) statement will be deemed waived" and holding that "[b]y failing to comply with Rule 1925(b), [the appellant] waived the issue that he ... request[ed] [the] Court to address"). Accordingly, we will not address the Fouses' due process argument.

With respect to the Fouses' equal protection argument, we are mindful that "[a] statute duly enacted by the General Assembly is presumed valid[.]" W. Mifflin Area Sch. Dist. v. Zahorchak , 607 Pa. 153, 4 A.3d 1042, 1048 (2010). "The party seeking to overcome the presumption of validity must meet a formidable burden." Commonwealth v. Means , 565 Pa. 309, 773 A.2d 143, 147 (2001). "Legislation will not be invalidated unless it clearly, palpably and plainly violates the constitution and any doubts are to be resolved in favor of a finding of constitutionality." Appeal of McNelly , 122 Pa.Cmwlth. 601, 553 A.2d 472, 476–77 (1989) (citing Pa. Liquor Control Bd. , 485 A.2d at 732.

The Equal Protection Clause of the Fourteenth Amendment to the United States Constitution provides, in relevant part: "No State shall ... deny to any person within its jurisdiction the equal protection of the laws." U.S. CONST. amend. XIV, § 1. The corresponding portions of the Pennsylvania Constitution provide as follows:

All men are born equally free and independent, and have certain inherent and indefeasible rights, among which are those of enjoying and defending life and liberty, of acquiring, possessing and protecting property and reputation, and of pursuing their own happiness.

PA. CONST. art. I, § 1.

Neither the Commonwealth nor any political subdivision thereof shall deny to any person the enjoyment of any civil right, nor discriminate against any person in the exercise of any civil right.

PA. CONST. art. I, § 26. "In analyzing [an] equal protection challenge to [a statute], we must first determine the appropriate level of judicial scrutiny to be applied." Zauflik v. Pennsbury Sch. Dist. , 72 A.3d 773, 790 (Pa. Cmwlth. 2013), aff'd , 629 Pa. 1, 104 A.3d 1096 (2014) (citing Smith v. City of Philadelphia , 512 Pa. 129, 516 A.2d 306, 311 (1986) ). "Strict scrutiny of a legislative classification applies only when the classification impermissibly interferes with the exercise of a fundamental right or operates to the peculiar disadvantage of a suspect class." Zauflik , 72 A.3d at 790 (quoting Mass. Bd. of Retirement v. Murgia , 427 U.S. 307, 312, 96 S.Ct. 2562, 49 L.Ed.2d 520 (1976) ) (internal quotation marks omitted). To survive strict scrutiny, a classification "must be justified by a compelling government interest and ... must be strictly construed." Id. at 790-91 (citing Smith , 516 A.2d at 311 ). "If the classification involves an important government interest," then intermediate judicial scrutiny is applied to determine whether the classification "serve[s] important governmental objectives" and is "substantially related to the achievement of those objectives." Id. (quoting Craig v. Boren , 429 U.S. 190, 197, 97 S.Ct. 451, 50 L.Ed.2d 397 (1976) ) (brackets omitted). "Finally, if the classification does not involve either fundamental rights, suspect classes, or sensitive or important government interests, it will be upheld if there is any rational basis for the classification." Id. (quoting Smith , 516 A.2d at 311 ) (internal quotation marks omitted).

The Fouses argue that the trial court erred in applying the rational basis level of scrutiny to determine whether RETSL's lack of a post-tax-sale redemption right violates their equal protection rights. Fouses' Brief at 7. The Fouses contend that RETSL's failure to provide residents of third¹⁰ to eighth class counties with the opportunity to redeem property following a tax sale "infringes upon a ‘fundamental right,’ " such that "a reviewing court...