City of Philadelphia v. Lerner—Ignoring the Government’s Requests for Information Only Works if You’re With the Government

Remember Lois Lerner? Remember her pleading the Fifth, and refusing to answer questions about alleged IRS wrongdoing?  In City of Phila. v. Lerner, we learn that this doesn’t work out the same way when you’re not employed by the government.

In 2004, the City of Brotherly Love (home of the Tax-Free Shopping Spree) received an anonymous tip that one of its residents—Nathan Lerner—wasn’t shouldering his share of the city’s tax burdens and was concealing the existence of businesses (and thus, their taxable profits) from the City. But games of hide-and-seek don’t end just because the Seeker asks where you’re hiding, and Mr. Lerner declined to answer the City’s requests for information about his businesses. More audaciously, Lerner ignored the exorbitant tax bills that the City sent him to smoke out the true information.

The City filed an enforcement action in the CCP, requesting full payment of the exorbitant taxes they assessed. A default judgment followed, and an opening of the default, and finally Mr. Lerner showed up in court. Lerner, as appears to be his custom, declined to answer the City’s motion in limine, which was granted, preempting Lerner from challenging the underlying tax estimates, which the City’s own employees described as “just [made] up,” and designed to scare the taxpayer into “com[ing] in and mak[ing] sure the figures are accurate.” The trial court agreed, concluding the tax bill was “basically an amount pulled out of the sky,” but nonetheless ordered Lerner to pay the full, assessed amount with interest.

Lerner challenged the trial court’s ruling that he must pay the tax bill as against the weight of the evidence, and argued that he should have been able to argue the underlying tax bill in the CCP. SCOPA disagreed, ruling that a litigant’s failure to exhaust all administrative remedies barred him from raising the waived argument in court. The Court framed this as a jurisdictional matter, arguing that the Philadelphia Tax Review Board had exclusive original jurisdiction over the tax amount.

Lerner urged for a special exception to the rule, which has been around since at least Krug v. City of Phila., 152 Pa.Cmwlth. 475 (1993). The Court declined to create such an exception, and made little effort to disguise its disgust with Lerner for his failure to answer requests for information, tax bills, complaints, and even motions before the trial court. “Lerner asserts that reversal is necessary to prevent a ‘fraud’ in the legal process. But that process consists of rules, and Lerner has flouted them at every turn.”

An unusually spirited pair of dissents issued from Chief Justice Saylor and Justice Donohue. Justice Donohue argues that the “scam preceded any attempt by Lerner to assert a defense,” and expresses hope that it will be “the rarest of occasions when a plaintiff comes into a Pennsylvania court, straightforwardly admits in its case-in-chief that it is proceeding arbitrarily and without any evidentiary basis whatsoever, and nevertheless demands that the court enter judgment in its favor on a fictional damage amount.” Justice Donohue would eschew the typical considerations of efficiency underlying the “exhaustion of administrative remedies rule,” and refuse to allow an admitted fraud to be perpetrated through the courts.

This case is not terribly noteworthy for its rule of decision: after all, exhaustion of administrative remedies is a standard precursor to arguments in trial courts. But one can’t help but notice the way in which this decision would be different if the parties were reversed. We don’t need the experience of Lois Lerner to know that local taxing authorities don’t feel constrained to respond to the taxpayer’s request for information in a timely manner. For the taxpayer, however, failure to respond gives the taxing authority power to pick the penalty in a Pennsylvania court, and apparently to accompany the choice with an open admission of its exorbitance.

Furthermore, while this case rested largely on procedural grounds, one wonders why the Court did not consider the possibility that there is a difference between skipping administrative remedies as a Plaintiff, and being able to raise the lack of substantive proof as a Defendant. No one is arguing that Lerner should be able to sue the City of Philadelphia without first exhausting all administrative processes; but when sued over an amount that is admittedly made up, a trial court seems like the appropriate venue for fact-finding, regardless of the taxpayer’s past omissions.

Slip opinion here.

Saylor, C.J., dissenting.

Donohue, J., dissenting.

Com v. Martinez: Plea Deals are Contracts

The right to trial by jury is so valuable that giving it up binds the prosecution to whatever was promised the defendant–even in the face of a subsequent statutory change. This case is a consolidation of three cases that came out of York County (home of the “first” capital of the United States). The case turns out to be a simple re-affirmation of the right to the benefit of your bargain, even if you are a criminal, and that bargain is with a prosecutor.

Three defendants accused of crimes agreed to plea deals that required them to register under Megan’s Law, which provided lesser registration requirements than its successor, SORNA. SORNA, by its terms, applied to those still under registration requirements from Megan’s Law, which means that many registered sex offenders saw their registration times extended on the activation of SORNA in December of 2012.

But three York County registrants–Martinez, Grace and Shower–filed motions with a trial judge in York County, who saw this new requirement as a violation of both the ex post facto clauses of our Constitutions, and of basic principles of contract law.

The Commonwealth appealed. Each of the three convicts argued that the precise amount of time they would be required to register was a material element in the deal they struck with prosecutors; requiring them to register for longer terms, after they had struck deals, would violate their contract with the Commonwealth.

The Court agreed with Martinez, et al, and if anything, expanded the argument by ruling that it does not matter if a particular provision is central or “collateral” to a defendant’s plea deal; rather, the simple inquiry is “whether an alleged terms is part of the parties’ plea agreement” at all, and if it is, then “the convicted criminal is entitled to specific performance.”

Although plea agreements are notably different from standard contracts in that they require acceptance by a court, once the trial court “has accepted a plea agreement entered into by the Commonwealth and a defendant, the prosecutor is duty bound to fulfill the promises made in exchange for the defendant’s guilty plea.” This is based on the precious consideration supplied to the Commonwealth by the defendant, namely “the very valued constitutional guarantees attendant the right to trial by jury.”

This case offers a unique paradox for criminal defendants, and particularly those convicted of sex crimes. Those convicted at the same time that these three defendants pled guilty will be required to register for longer terms under SORNA’s lengthened reporting requirements. Pleading guilty, rather than being convicted, allowed these three to “freeze” their reporting requirements in such a way that they could not be extended. Holding the Commonwealth to its contractual promises during plea deals turns out to be easier than avoiding ex post facto punishment–at least for now.

Com. v. Kindler: Escaping SCOPA Jurisdiction…For Now

This case is short and simple, but the backstory is fascinating. Arrested for burglary in 1982, Joseph Kindler managed to escape from jail, although he was recaptured quickly. Shortly thereafter, while out on bail, he murdered the key witness against him in the burglary. Convicted of the murder in 1983, he was never sentenced because he managed to escape from the maximum security prison he was in by sawing through the bars. Two years later, he was arrested for a new burglary in Quebec, Canada (home of North America’s only Holy Door). He managed to escape, yet again, by being hoisted by fellow inmates fifteen feet above the floor and breaking through the skylight on the thirteenth floor of the jail. From there, he escaped to the roof and rappelled down the side of the jail with 175 feet of bedsheets tied together. His fellow escapee did not fare so well; his sheets ripped on the way down, and he plummeted to his death.

Kindler remained at large for two more years before being rediscovered and arrested due to being featured on America’s Most Wanted. Neighbors recognized him and he was promptly arrested and sent back to Pennsylvania, where he finally was sentenced.

His case took a long and meandering path, however, as he brought a federal habeas action after his state appeals dried up. His case rose all the way to SCOTUS, where it was determined that a discretionary rule can still suffice as adequate and independent state grounds for a ruling, thus barring federal habeas review. Beard v. Kindler, 558 U.S. 53 (2009).

This brings us–finally–to the present, where Kindler is facing sentencing before the Court of Common Pleas of Philadelphia County (home of the Haunted Prison Walk). His sentencing judge precluded the Commonwealth from introducing a victim impact statement at sentencing because it would not have been admissible when Kindler was originally set to be sentenced back in 1983. The Commonwealth sought to appeal this interlocutory order to SCOPA on the basis that the High Court retains exclusive jurisdiction over death penalty appeals.

The Court, speaking through Justice Baer, ruled that they do not have jurisdiction over the case. The Superior Court must first pass on all interlocutory criminal appeals, and thus, the High Court lacks jurisdiction. The Commonwealth argued that the case could properly be brought before SCOPA at this stage because it is a death penalty case. The Court did not buy this logic, insisting that its jurisdiction would not be “triggered” until he was sentenced to death.

Of particular note in this case is the Court’s apparent clarity that the Superior Court is the default court of general appellate jurisdiction. Quoting to 42 Pa.C.S. § 702(a), the Court notes taht the Superior Court’s jurisdiction is circumscribed only by specific grants of appellate exclusivity to the other two Pennsylvania appellate courts, and so the Superior Court is the appropriate court to appeal to unless otherwise specified.

And so Kindler’s appeal is transferred to the Superior Court to  hear the Commonwealth’s appeal of the trial court’s preclusion of a victim impact statement. For now, Joseph Kindler continues to evade fate.