The state Supreme Court on July 3 denied Carbon County's petition to appeal a lower-court ruling that the Panther Valley School District may use a Montgomery County law firm to collect delinquent property taxes, and that it does not have to pay $223,000 in retroactive commissions to the county.
The ruling was the last action stemming from a lawsuit filed in 2009 by the county against the school district for using Portnoff Law Associates, of Norristown, instead of the county to collect the overdue taxes.
The suit asked for the retroactive commissions for delinquent tax collections from 2000 through 2006; as well as for auditing services used to complete county records, and for the return of all county tax records.
The suit involved county commissioners Wayne Nothstein, William O'Gurek and then-commissioner Charles Getz, as well as the county Tax Claim Bureau.
Portnoff became involved in the suit when it intervened on the school district's behalf.
Monroe County Judge Jerome P. Cheslock heard the case, and ruled early in October that the district had to turn over all tax records to the county, and pay the commission and other fees plus legal fees and costs. Portnoff could not collect the delinquent taxes.
However, the school district appealed the ruling, and on Jan. 10, Commonwealth Court Judge Mary Hannah Leavitt overturned a portion of Cheslock's ruling. Her ruling gave Portnoff the right to collect the taxes, and reversed Cheslock's ruling that $223,000 in retroactive commission be paid to the county.
The commissioners in February appealed Leavitt's ruling to the state Supreme Court.
Schools Superintendent Rosemary Porembo was pleased with the ruling.
"With the Supreme Court decision, the case is finally closed," she said. "The ruling in favor of the district means that the district and all other governing entities that used Portnoff over the years do not owe any retroactivity because there was a statue of limitations. This saves the taxpayers over $150,000."
"Also, the district can use a third party collection agency if it chooses to do so. The district officials will have to analyze the difference between what Portnoff collection equals plus fees plus the 5 percent commission paid to the Tax Claim Bureau in comparison to the rate of return is to the district if the Tax Claim Bureau collected the delinquent taxes," she said.
However, Commissioner William O'Gurek, who was chairman when the suit was filed, had a different perspective. He contends the district violated the Real Estate Tax Records Law when it turned over delinquent collections and consequently, tax records to Portnoff.
"The county filed the action primarily with the intent of having those records returned to where the law says they should be,' he said. "Until the county received a favorable ruling that ordered the records be returned to the Tax Claim Bureau, everyone who sought information about the official tax records of the county was held hostage to Portnoff, since it had possession of those records.
"During the past decade or so, that meant every lawyer and/or title searcher executing a sale of a property in those districts during the time Portnoff held our records, was required to get clear title to it, regardless of whether or not there were delinquent taxes owed on it," O'Gurek said. "Subsequently, a home buyer was required to pay extra costs associated with the closing on the sale, all of which went to Portnoff. Keep in mind that thousands of properties changed hands in those districts in the last 10 years, each requiring payment of additional fees to Portnoff.
"In addition to that, Portnoff filed thousands of municipal liens against property owners and passed hundreds of thousands of dollars in fees on to the taxpayers," he said.
And then there's the money matter. O'Gurek cited court testimony given by firm principal and 100 percent shareholder Michelle Portnoff in the case.
"While she did not have the year 2000 earnings available, she testified to staggering amounts of money her firm earned, from residents of the Panther Valley School District, including those delinquent and those who were not, from home buyers, from lawyers and title searchers who had to pay fees such as $50 for a fax or a certification, all because the county's official records were missing from the county and authorized by the Panther Valley school directors to be shipped down the turnpike to a private law office," he said.
he quoted from the transcript: "Question: How much has your firm made on payoff fees since 2000 until now on all of the fees you've collected for access to information on delinquent paying?" Answer (Michelle Portnoff): "For the year 2001, $155,581; 2002, $207,030; 2003, $448,887; 2004, $537,100; 2005, $821,898; 2006, $1,088,745; 2007, $968,517; 2008, $673,049; 2009, $597,399; 2010, $612,447."
O'Gurek summed up the total: $6,110,653.
"So, are we as commissioners disappointed with the recent court decision? Heck yes, as well as the decisions made by the Panther Valley school directors who inflicted a $6 million hardship on the people they represent," he said.
However, O'Gurek was grateful that the part of Cheslock's ruling about returning the records was let stand.
"I believe the commissioners are satisfied the action the county took has restored the records and put an end to unnecessary charges our people have faced for over a decade," he said.