Subsurface Coal Rights and Real Estate Tax Assessments

Exceptions and Challenges of Rausch Creek Land, L.P., 2012 Pa. Commw. LEXIS 311 (2012)

Frank Kosir, Jr., Esquire
fk@muslaw.com

This matter addressed the issue of whether the owner of subsurface coal rights was permitted to challenge, before the County tax claim bureau, the validity of real estate tax assessments levied upon those coal rights.  Rausch Creek Land, L.P. (“Rausch Creek”) was the owner of subsurface coal rights under five separate parcels of real property situated in Schuylkill County, Pennsylvania, designated as Tax Parcel Nos. 13-0-54803019, 13-0-054841304, 13-0-54951301, 22-0-54851319, and 22-0-54930102 (“Parcels”).  Rausch Creek failed to pay the 2009 real estate taxes assessed on these coal rights and, in 2010, the Schuylkill County Tax Claim Bureau (“Bureau”) served Rausch Creek with letters advising that the coal rights would be sold at tax sale if the delinquent taxes were not paid by December of 2010.  In response, Rausch Creek filed individual challenges and exceptions for each parcel under Section 309(c) of the Pennsylvania Real Estate Tax Sale Law (“Law”), (72 P.S. § 5860.309(c)) (which requires that all real property against which a claim is asserted be accurately described), alleging that the Parcels were not sufficiently identified in the Schuylkill County Tax Mapping Department and that the Parcels’ identification numbers were based upon Pennsylvania Department of Environmental Protection surface mining permits, not real property records.  The Bureau overruled the challenges and exceptions, and the trial court affirmed.

 

On appeal, our Commonwealth Court affirmed.  In issuing its ruling, the court concluded that the challenges and exceptions that Rausch Creek had raised before the Bureau did not attack the validity of the liens themselves but, rather, challenged the underlying assessments.  Therefore, the proper course of action for Rausch Creek to undertake would have been to file assessment appeals with the Schuylkill County Board of Assessment Appeals.  However, as it had failed to do so, and Section 314 of the Law (72 P.S. § 314) allows for a tax claim to be set aside or found invalid only “for any other reason not involving a question which could have been raised by an appeal provided for by law,” Rausch Creek’s failure to raise these challenges in the form of an assessment appeal precluded it from raising these issues before the Bureau.  As such, Rausch Creek was not entitled to its requested relief, and the trial court had properly dismissed the challenges and exceptions.

Association of Corporate Counsel of Western Pennsylvania Meeting - January 8, 2013

Ron Hicks and Beth Slagle will be speaking at the upcoming ACC Western Pennsylvania meeting which Meyer, Unkovic & Scott is sponsoring. The presentation is entitled “Drafting Effective Indemnification and Insurance Clauses In Commercial Contracts,” and will be held at the Rivers Club on January 8, 2013.

Click here for more information or to register.

Ensure Fairness To All Heirs

Successful parents know that treating children equally is not a matter of giving them all the same things or supporting them with the same exact funding.  The summer trek across Europe on a bicycle that one teen yearns to take might cost more than the outdoor camp another craves to attend.  It would be foolish to set the same college savings goals for a daughter who won the science fair and a son who gets average grades.  A child with mental challenges may require more support than one without any disabilities.

 

In short, parents should learn to equate fairness with filling needs rather than dividing chips.
 

Estate planning requires the same approach, even for those whose estates fall below the taxable minimum.  Even though it may seem much easier just to split things equally to avoid being seen as unfair, an even split may not be the way to act in the best interests of the heirs. 

 

It’s almost impossible to predict what the individual needs of each child could be, especially when the children are younger when the estate planning is taking place. The way out of this dilemma is to create a pot trust. Rather than establish a separate trust for each minor child, the parent(s) creates one common “pot” from which a trustee draws to cover all the stipulated expenses of the children up to a certain age. The trustee is not required to spend the same amount on each child.  Once the youngest child is of the age stipulated in the trust, the remainder of the pot trust is divided, usually equally, among all the beneficiaries it covers.

 

Another advantage of a pot trust is that the property placed in trust does not have to be divided. A separate trust for each child might require the trustee to sell a business, investment accounts or real estate, which might not be in the best interests of the family.
 

A pot trust makes most sense when children are young and fairly close in age. The older the children are, the more of the costs covered by the typical pot trust will have already been incurred. 

 

The key decision to make for the pot trust is who will be the independent trustee.  The trustee has the final say on whether and how the money is to be distributed throughout the duration of the trust, so the trustee must be both scrupulous and knowledgeable of the family dynamics. The trustee’s decisions are not predetermined, and can’t be automated. 
 

When discussing the creation or updating of an estate plan, it is imperative that you share with your attorney not just your goals, but also your fears of what may happen after your passing.  Once the attorney knows what you want and don’t want to happen with your estate, he or she will be in a much better position to help you reach the goals.

 

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Amanda Gerstnecker, Esquire
arg@muslaw.com

John W. Powell, Esquire
jwp@muslaw.com



 

Amanda R. Gerstnecker and John W. Powell are attorneys with Pittsburgh-based Meyer, Unkovic & Scott.  They focus their legal practice on estate planning and business formation, governance and succession planning.

 

Home Builders Could Be Liable For Repairs

 

In a case of first-impression in Pennsylvania, the Pennsylvania Superior Court announced that home builders could be liable under the implied warranty of habitability not only to their customers, but also to later purchasers of the residence.
 

On November 5, 2012, in Conway v. The Cutler Group, (No. 803 EDA 2012) the Superior Court held that the implied warranty of habitability applies to subsequent purchasers of a residence down the line from the original purchaser. In other words, not only can the first purchaser of the home bring a claim against a builder, now any subsequent purchaser of the home within 12 years of its construction can bring such a claim.

The facts are these. In September 2003, a builder constructed a home in Jamison, Pennsylvania. The first resident-purchasers bought the home and lived in it for a time. Then, in June 2006, the second resident-purchasers, the Conways, bought the home. The Conways discovered water infiltration around the windows in the master bedroom in April of 2008. The Conways filed a complaint against the original builder alleging only one count: breach of the implied warranty of habitability.
 

The Superior Court held that the implied warranty of habitability should not terminate when the first resident-purchaser sells the property. The Court held that the risk of a hidden defect should continue with the builder.

This is a significant extension of the scope of this theory of liability in Pennsylvania. Now, under the Superior Court's reasoning, any subsequent owner of a residential property is able to file a claim against the builder for a breach of the implied warranty of habitability before the 12 year statute of repose expires.

The Court explained that the liability is still limited by two factors. First, any claims brought after 12 years from the time of the completion of the construction are barred by the statute of repose regardless of when defects are discovered. Second, the Court emphasized that the breach of the implied warranty must still be proven. A plaintiff must show that a defect is latent (hidden) and non-obvious, that the defect is a result of the builder's design or construction, and that the defect affects the habitability of the residence.

Because of the Court's holding, the plaintiffs were permitted to continue with their litigation against the builder. Builders should be aware of this change in the law and realize that latent defects may now subject them to liability up to twelve years after the construction is complete, no matter the number of times a home is sold during that period.

 

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Kevin F. McKeegan

kfm@muslaw.com

412.456.2838

 

Mr. McKeegan has more than twenty-eight years of experience in all aspects of Pennsylvania land use and property development law. While primarily representing property owners and developers, Mr. McKeegan has earned a reputation of being able to work in close coordination with all stake holders - community groups, municipalities and his clients - to smooth the development process. His diverse practice has included representing the developers of an over 1 million square foot regional shopping mall and the owners of a multi-phase residential golf course community. Mr. McKeegan took the lead in drafting a "traditional neighborhood development" zoning ordinance that incorporated not only his client's needs for a mixed-use (office, retail and residential) project but also accommodated community concerns regarding landscaping, buffering and preserving environmentally sensitive areas.

Brandon B. Rothey

bbr@muslaw.com

412.456.2544

Mr. Rothey is an associate at Meyer, Unkovic & Scott LLP. He regularly counsels and represents clients with respect to construction, real estate, and commercial litigation. He has worked on cases for both plaintiffs and defendants involving breach of contract, negligence, negligent misrepresentation, products liability, the Pennsylvania Unfair Trade Practices and Consumer Protection Law, insurance coverage, and professional malpractice. Mr. Rothey has counseled and represented clients in the energy, manufacturing, construction, and health care industries. After receiving his B.S. from Pennsylvania State University, he graduated with a J.D. from the University of Pittsburgh School of Law in 2009.

 

OSHA Revises Standard

Jane Lewis Volk, Esquire
jlv@muslaw.com

The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) has recently revised its Hazard Communications Standard.  The new standard aligns OSHA with the United Nations’ global chemical labeling standard.  Once fully implemented, OSHA expects the new regulations to prevent an estimated 43 deaths and result in an about $475.2 million in productivity savings annually for U.S. employers.

 

As many employers know, OSHA’s Hazard Communications Standard is the most often cited of all OSHA regulations. This standard requires chemical labeling, the maintenance of material safety data sheets and safety training of employees.  The labeling is under the control of the manufacturer, but employers are required to comply with the workplace-related provisions. Any employer that has undergone an OSHA inspection knows that compliance officers invariably focus on these matters.

 

The revision of the standard ensures consistent practices both nationally and internationally. OSHA’s new standard will classify chemicals according to their health and physical hazards, and establish consistent safety data sheets for all chemicals made in the United States and imported from abroad.

 

The revised standard will also require new labels on all chemicals.  Previously, chemical preparers were permitted to label containers in a variety of ways as long as it contained the required information. The new labels, however, must adhere to a strict format that contains all of the following:

• Signal word: determines the level of severity of the hazard.  “Danger” will indicate the most severe hazards, while “warning” will be used for less severe hazards.
• Pictogram: indicates the type of hazard posed by the chemical.  The pictogram must be contained within a red diamond.  A black border will no longer be accepted.
• Hazard statement: describes the classification of the hazard.
• Precautionary statement: gives recommended precautions to avoid harm from the chemical.

In the past, OSHA did not enforce the requirement to update labels as new information about chemicals and their hazards became available.  But as part of the new standard, OSHA has indicated that it will crack down on updates to labels, requiring employers to revise labels within six months of becoming aware of any new information.

 

Employers will be required to provide employee training about the new labels and safety data sheet format. Although the new standards will not begin to take effect until 2015, employee training must be completed by the end of 2013.

 

Once fully phased in by 2016, the revised standard is expected to prevent an estimated 585 injuries and illnesses annually. It will reduce trade barriers and result in productivity improvements for American business that regularly handle, store and use hazardous chemicals.  OSHA estimates cost savings of $32.2 million alone will accrue to employers that periodically update safety data sheets and labels for chemicals covered in the standard.

 

Any employer that utilizes chemical substances in the workplace should request updated materials from its suppliers and plan to initiate new hazard communications and training in the workplace to comply with the new standard.

Zoning Issues - Right to use single-family dwelling for multi-family residential purposes?

Frank Kosir, Jr., Esquire
fk@muslaw.com

Salahuddin v. Zoning Hearing Board of West Chester, et. al, 2012 Pa. Commw. LEXIS 317 (2012)

 

This matter addressed the issue of whether a previous non-conforming use of a single-family residential dwelling as a rooming house vested the property owner with the right to use that dwelling for multi-family residential purposes.  In April of 1996, Amna  Salahuddin (“Salahuddin”) took title to a 3,679 square feet parcel of real property (“Property”) situated in the Borough of West Chester (“Borough”), Chester County (“County”), Pennsylvania.  The Property was located in the NC-2 Neighborhood Conservation District under the Borough Zoning Ordinance (“Ordinance), and erected thereon is a single-family, three-story, semi-detached dwelling (Dwelling”).  Up until 1992, the previous owner of the Property had resided on the first floor of the Dwelling, and rented the second and third floors as a rooming house.  The Property was acquired by PNC Bank in a 1992 mortgage foreclosure, at which time the rooming house use ceased.  At the time that Salahuddin took title to the Property, she was aware that the rooming house had ceased, and that the Dwelling was classified as a single-family residence.

After taking title to the Property, Salahuddin used the first floor of the Dwelling as a single-family residence, and made no use of the second or third floors.  In January of 2011, she submitted a zoning application to the Zoning Hearing Board of West Chester (“Board”) seeking a variance to utilize the Dwelling as a multi-family residence and, in support of her position, asserted that the rooming house use constituted a non-conforming, pre-existing use that had not been abandoned, thereby entitling her to use the Dwelling for multi-family purposes.  The Board denied Salahuddin’s application, and the trial court affirmed.

On appeal, our Commonwealth Court affirmed.  In issuing its ruling, the court pointed out that, as the foreclosing mortgage holder, PNC Bank did not have legal authority to abandon the non-conforming, pre-existing rooming house use during the time that it held title to the Property.  Therefore, at the time that Salahuddin took title, the rooming house use remained a legal non-conforming, pre-existing use.  However, once Salahuddin took title to the Property, she made no effort to use the Dwelling as a rooming house and, after holding title for five years, sought to use it as a multi-family use which, under the language of the Ordinance, is a wholly separate and distinct use from that of a rooming house.  As such, the proposed multi-family residential use would not constitute the continuation of the non-conforming, pre-existing rooming house use and, as Salahuddin had failed to establish that the continued use of the Dwelling as a single family residence would inflict a hardship upon her, she was not entitled to the requested variance relief.

Self-Employment: Does it Impact Your Unemployment Compensation Benefits?

 

Beth A. Slagle, Esquire
bas@muslaw.com

So you've been laid off from your job and want to make a little extra side money selling jewelry or mowing lawns. Can you do it without jeopardizing your unemployment compensation benefits? What if you only make $100 a week or work only a few hours doing the side activity? While those side jobs may seem innocuous to you since they pay only a few bills, they may very well put your benefits in jeopardy.

Under Pennsylvania law, when an individual is receiving unemployment compensation benefits, they are permitted to become employed by a company, and subject to the eligibility requirements and income generated, the amounts made in that employment will be used to offset amounts received in benefits. In that scenario, "employment" is the key word. When it comes to starting your own business or accepting an independent contractor job, however, the law treats that situation very differently.

In fact, attempts to obtain alternative side-income through self-employment or independent contractor status while receiving unemployment compensation have generally been met with a critical eye by the Pennsylvania Department of Labor and Industry. Section 402(h) of the Pennsylvania unemployment compensation law mandates that individuals who are self-employed are not eligible for unemployment compensation, and when initially enacted, decisions rendered by referees universally rejected unemployment compensation claims for individuals engaged in any type of self-employment, regardless of whether any money was made.

Apparently recognizing some inequity in that position, a recent line of Pennsylvania appellate cases suggests that some side jobs undertaken, while the claimant is engaged in seeking full-time employment, will not automatically render the claimant ineligible for benefits.

The confusion comes from the fact that "self-employment" is not a defined term in Pennsylvania unemployment compensation law, so courts have to look elsewhere to determine what the phrase means. Universally, they look to the unemployment compensation law definition of "employment" which describes a person as being employed unless: (1) the individual is free from control or direction of an employer, and (2) the individual is providing services and they are "customarily engaged in an independently established trade, occupation, profession or business."

The recent court decisions have placed emphasis on the second prong -- whether the individual is "customarily engaged" in a business. Basically, the common theme through the cases is that if the job and/or income is sporadic or temporary, such as a few hours a week or on nights or weekends, courts are more inclined to rule that the individual is not customarily engaged in business, so that they can continue receiving benefits. This is especially true when the self-employment was undertaken while the individual was actively engaged in searching for full time employment. If, however, the individual is trying to make a living with the recently started business, instead of simply using it as a side activity, then the courts take a much harsher view, regardless of whether the individual has generated any income or no income at all. In this scenario, benefits will likely be denied.

The bottom line is that individuals receiving unemployment compensation should first determine whether the random side job or self-employment activity will render them ineligible for benefits before undertaking that activity. Seeking the assistance of counsel is a wise move before accepting any job that may jeopardize your valuable unemployment compensation benefits.