Appendix — Grimes v. Wetzler

Supreme Court brief2001

Ask Donna

What actually matters in this document.

Text

APPENDIX A

IN THE SUPERIOR COURT OF PENNSYLVANIA

J.A07020/00

2000 PA Super 90

No. 2668 EDA 1999

CHARLES L. GRIMES,

Appellee,

JAMES W. WETZLER, INDIVIDUALLY, AND

MICHAEL H. URBACH, AS TAX COMMISSIONER OF

THE STATE OF NEW YORK,

PHILIP ZURLO, WARREN BROWN, MARY ANN LINN,

AND SUNEIL MEHRA, INDIVIDUALLY AND AS

EMPLOYEES OF THE DEPARTMENT OF TAXATION

AND FINANCE OF THE STATE OF NEW YORK,

Appellants.

No. 2718 EDA 1999

CHARLES L. GRIMES,

Appellant,

JAMES W. WETZLER, INDIVIDUALLY, AND

MICHAEL H. URBACH, AS TAX COMMISSIONER OF

THE STATE OF NEW YORK,

PHILIP ZURLO, WARREN BROWN, MARY ANN LINN,

AND SUNEIL MEHRA, INDIVIDUALLY AND AS

EMPLOYEES OF THE DEPARTMENT OF TAXATION

AND FINANCE OF THE STATE OF NEW YORK,

Appellees.

Appeal from the Decree entered August 16, 1999

In the Court of Common Pleas of Chester County,

Civil No. 93-10226

Before CAVANAUGH, BECK, JJ., and CIRILLO, P.J.E.

Argued Feb. 15, 2000. Filed March 23, 2000.

CIRILLO, P.J.E.:

41 Charles Grimes appeals and James Wetzler,

Michael Urbach, Philip Zurlo, Warren Brown, Mary Ann

Linn, and Suneil Mehra’ (Appellees/Cross-Appellants)

cross-appeal from the final decree entered by the Court

of Common Pleas of Chester County. We reverse the

order denying preliminary objections and dismiss the

case for lack of jurisdiction.

72 In November of 1998, Grimes instituted the

underlying declaratory judgment action, based upon the

Civil Rights Act of 1871, 42 U.S.C. § 1983, seeking a

declaration that from 1978 and at all times after he was

-never and has not been a domiciliary’ of the State of

* __ Wetzler was sued individually and as Tax Commissioner of the

State of New York, Urbach was later added as the new Tax

Commissioner of New York. Appellees/Defendants Zurlo, Brown, Linn

and Mehra were all sued as employees of the Department of Taxation

and Finance for the State of New York. The Department of Taxation

and Finance for the State of New York wasnever named a party in this

suit.

. Domicile has been defined by this court on many occasions to

mean residence in the place where domicile is claimed and an intent

to reside permanently in the location. See Stambaugh v. Stambaugh,

458 Pa. 147, 329 A.2d 483 (1974). See also Tax Review Bd. v. Belmont

Labs. Co., 392 Pa. 473, 476, 141 A.2d 234, 236 (19680) (“Domicile is a place

where a person has his true, fixed, permanent home and principal

establishment, to which, whenever absent therefrom, he intends to

return and continues until another permanent home and principal

establishment is acquired.”). The domicile of a person is the place

Ra ED PEER AL IA

New York. Grimes claimed that Appellees, individually

and in their capacity as employees of the New York

State Department of Taxation and Finance, improperly

assessed him for tax liabilities in excess of one million

dollars for the tax years 1962 to 1990. From 1983 to 1990,

with the sole exception of 1987, Grimes filed New York

resident tax returns. He also took advantage of certain

New York tax credits. Grimes, however, claims that he

had established Pennsylvania as his domicile in 1978.

73 In 1990, the New York State Department of

Taxation and Finance began to conduct an audit of

Grimes’ 1987 tax returns; the audit proceeded through

1992. Both Grimes and his representative were

uncooperative in the process.

74 In his complaint Grimes asserted that his

constitutional rights were violated by New York taxing

authority employees whose harassing and arbitrary

implementation of taxing guidelines violated his civil

rights. Moreover, Grimes contended that his ability to

freely travel between Pennsylvania and New York has

been hampered because of his inability to determine his

here he has voluntarily fixed his habitation with a present intention o

make it either his permanent home or his home for the indefinite

future. To effect a change of domicile there must be a concurrence of

two factors: physical presence in the place where the new domicile is

alleged to have been acquired, and the intention to make it one’s home

without any fixed or certain purpose to return to the former place of

abode. Loudenslager Will, 430 Pa. 33, 240 A.2d 477 (1968); Publicker

Estate, 385 Pa. 408, 123 A.2d 655 (1956); Zinn v. Zinn, 327 Pa.Super. 128,

130-132, 475 A.2d 132, 133 (1984). It is an established principle that

domicile, having been shown to exist, is presumed to continue until

another domicile is affirmatively Proven. Obici Estate, 373 Pa. 567,571,

97 A.2d 49, 51 (1963).

LSE

aE Sea ER Ms

obligations under New York tax laws.’ Such actions, he

contends, entitle him to relief from the past, in the

present, and in the future.

75 Appellees filed preliminary objections to

Grimes’ complaint alleging that the trial court lacked

personal jurisdiction over them. See Pa.R.C.P. 1028(a)1).

The trial court denied the objections and Appellees then

filed a motion for reconsideration of the court’s previous

order. The trial court granted reconsideration, staying

the taking of depositions until proceedings were held on

the issue of personal jurisdiction. In his complaint and in

opposition to the preliminary objections, Grimes first‘

contended that the trial court had personal jurisdiction

over the Appellees/defendants based upon this

Commonwealth's long-arm statute, specifically 42 Pa.C:S.

§ 5322(a\(4) (general jurisdiction over a person whose

actions or omissions outside of this Commonwealth

have caused harm or injury in this Commonwealth).

* At the time he instituted suit in this Commonwealth, Grimes was

involved in administrative proceedings in New York with regard to

these same tax assessments. In 1996, after a hearing before the New

York State Division of Tax Appeals, Grimes was found to not have

been a domiciliary of New York as of 1987. Subsequently, a notice of

cancellation of deficiency of taxes for the 1987 tax year was issued.

* As an alternative argument to establish the court’s personal

jurisdiction over Appellees, Grimes asserted in his response to

Appellees’ preliminary objections that the court also had such

jurisdiction generally because of the fact that New York had the

authority to tax items purchased in Pennsylvania but shipped to New

York. This form of taxation, which he claims takes place daily,

established the minimum contacts sufficient to confer Pennsylvania

with personal jurisdiction in the present case. In World-Wide

Volkswagen Cor p. v. Woodson, 444 US. 286, 100S.Ct. 558, 62 L_.Ed.2d 490

(1980), however, the Court stated that “financial benefits accruing to

the defendant from a collateral relation to the forum State will not

support jurisdiction if they do not stem from a constitutionally

cognizable contact with that State.” Id. at 299, 100 S.Ct. 559.

After proceedings, the court issued an order denying the

Appellees’ reconsideration motion, finding that the court

did, in fact, possess in personam jurisdiction over the

Appellees.

"6 After an adjudication, the court memorialized

its findings of fact, including a discussion and its

conclusions of law. The court held that the Appellees

were, at most, negligent and that as government officials,

they were protected by qualified immunity. Both

parties filed post-trial motions which were denied; the

court entered a final decree.

17 On appeal, Grimes presents the following issues

for our consideration:

(1) Should the trial court have granted Defendants’

motion to dismiss Plaintiff's complaint for a declaratory

judgment that he is, and continuously since 1978 has

been, a domiciliary of Pennsylvania?

(2) Should the trial court have granted Plaintiff such

a declaration and an appropriate injunction on the

evidence presented at trial?

(3) Should the trial court have held that Defendants

were not liable for seeking to tax Plaintiff as an asserted

New York domiciliary because they were at most

negligent and were entitled to a qualified privilege?

78 On cross-appeal, the following issues are

presented:°

(1) Did the trial court err when it denied Defendants’

preliminary objections to in personam jurisdiction?

¥9 Before addressing Grimes’ issues on appeal, we

must first direct our attention to the issue raised by

cross-appellants/appellees as it concerns whether the

trial court had personal jurisdiction over Appellees in

the underlying case.

710 In the present case, Appellees filed preliminary

objections to Grimes’ complaint alleging lack of personal

jurisdiction. The trial court denied the objections

without filing an opinion Appellees filed a motion for

reconsideration, which was granted. The court held a

hearing wherein arguments were made for both sides as

to why the court did or did not have personal

, liction.

q11 First, we note that:

“(W]jhen preliminary objections, if sustained, would

result in the dismissal of an action, such objections

should be sustained only in the clearest of cases.” King

v. Detroit [Tool] Coal Co., 452 Pa.Super. 334, [336-338],

$ In their statement of questions on cross-appeal, Appellees also

include the following issues:

Did the trial court properly grant Defendants’ motion to dismiss

Plaintiff's claim for declaratory and injunctive relief as to a declaration

of his domicile for tax years beyond 1987?

Did the trial court properly hold that Defendants were entitled

to qualified immunity, and thus, not liable for damages?

We, however, find these two issues mere restatements of the

issues raised by Appellant. Accordingly, we find only one true issue to

be reviewed with regard to Appellees’ cross-appeal.

682 A.2d 313, 314 (1996) (citation omitted). Moreover,

because the burden rests upon the party challenging the

court's exercise of jurisdiction, the court must consider

the evidence in the light most favorable to the non-

moving party. Id. See also Filipovich v. JT. Imports,

Inc., 431 Pa.Super. 552, [555- 557], 637 A.2d 314, 316 (1994).

Once the movant has supported its jurisdictional

objection, however, the burden shifts to the party

asserting jurisdiction to prove that there is statutory and

constitutional support for the court’s exercise of in

personam jurisdiction. See, eg., McCall v. Formu-3

International, Inc., 437 Pa.Super. 575, [577-579] 650 A.2d

908, 904 (1994); Derman v. Wilair Services, Inc., 404

Pa.Super. 136, [139-141], 590 A.2d 317, 319 (1991). Hall-

Woolford Tank Co., Inc. v. RF. Kilns, Inc., 698 A.2d 80,

82 (Pa.Super.1997).

{12 The seminal United States Supreme Court case

regarding personal jurisdiction of non-resident

defendants is International Shoe Co. v. Washington, 326

U.S. 310, 66 S.Ct. 154,90 L.Ed. 95 (1945). In that case the

Supreme Court stated that a state court may only

exercise jurisdiction over a non-resident defendant so

long as there exists “minimum contacts” between the

defendant and the forum state. In World-Wide

Volkswagen Corp. v. Woodson, 444 US. 286, 100 S.Ct.

569, 62 L.Ed.2d 490 (1980), the Court redefined this

principle, concluding that the minimum contacts

requirement performs two distinct functions: (1)

protecting the defendants against the burdens of

litigating in a distant or inconvenient form; and (2)

ensuring that states do not overreach beyond the

limitations imposed on them by their status as “coequal

sovereigns in a federal system.” Id. at 292, 100 S.Ct. 559.

713 A defendant’s contacts with the forum state (in

this case, Pennsylvania) must be such that maintenance

of the suit “does not offend ‘traditional notions of fair

play and substantial justice.” Jd., quoting International

Shoe, supra at 316, 66 S.Ct. 154. “Reasonableness, in turn,

requires a consideration and balancing of the interests of

the plaintiff, the defendant, and the forum state, and the

interstate judicial system. The second purpose is served

by a clear recognition of the nature of the federal system

of government and the limits that system places on the

power of the individual states.” Kachur v. Yugo

America, Inc., 534 Pa. 316, 320, 682 A.2d 1297, 1299 (1993).

714 The transcript of the hearing wherein testimony

was presented on the jurisdictional issue reveals that

Grimes admits that the basis of his complaint is

premised upon the propriety of the New York tax

auditing process. Specifically, he claims that the state

employees’ failure to abide by guidelines caused him to

be harassed by the State of New York in its efforts to

assess taxes against him. Above and beyond these

claims, Grimes admits that all of the

defendants’/Appellees’ conduct about which he

complains occurred outside Pennsylvania, save for one

letter sent by the defendants to this Commonwealth.

See Rose v. Granite City Police Dept., 813 F Supp. 319

(E.D.Pa.1993) (the fact that one letter was mailed from a

foreign city and its police department to this

Commonwealth is not sufficient to confer Pennsylvania

with jurisdiction over the matter under this

Commonwealth’s long-arm statute). Moreover, it is

readily admitted that none of the Appellees reside in

Pennsylvania, have a place of business or a registered

office in Pennsylvania, and they do not do business in this

Commonwealth.

115 In order to subject a defendant to in personam

Jurisdiction, there must be some act by which the

defendant purposely avails itself of the privilege of

416 The trial court explained its finding of in

personam jurisdiction over the Appellees, stating:

It is clear that these defendants reached out and

purposefully directed their activities toward a

resident of this Commonwealth and, by their

efforts to extract New York State taxes from

plaintiff, caused harm felt by plaintiff in

Pennsylvania. Given their intentional and

allegedly tortious conduct, calculated to cause

injury in Pennsylvania, it does not offend

traditional notions of fair play and substantia!

justice to conclude that defendants could

reasonably anticipate being haled into court in

Pennsylvania.

717 In essence, Grimes’ assertion of personal

jurisdiction over the defendants is specifically related to

their alleged actions—harassment and injury to Grimes

by assessing him taxes in New York. In order for a

Pennsylvania court to assert specific jurisdiction, the

plaintiff's cause of action must arise out of the

defendants’ activities in the Commonwealth. Garzone v.

10a

Kelly, 406 Pa.Super. 176, 598 A.2d 1292 (1991); Derman v.

Wilair Services, Inc., 404 Pa.Super. 136, 590 A.2d 317

(1991). The statutory bases of jurisdiction over non-

residents of Pennsylvania is contained within 42 Pa.C.S. §

5322. The general rule, in part, provides that “the

jurisdiction of the tribunals of this Commonwealth shall

extend to all persons who are not within the scope of

section 5301 (relating to persons) to the fullest extent

allowed under the Constitution of the United States and

may be based on the most minimum contact with this

Commonwealth allowed under the Constitution of the

United States.” Kachur, supra at 319, 682 A.2d at 1298,

citing 42 Pa.C.S. § 53822(b). The question as to whether a

non-resident defendant has purposely directed his

activities at residents of the forum is not whether it was

foreseeable that the defendant’s activities would be

injurious in the forum, but whether the defendant’s

contacts with the forum state were such that he could

reasonably anticipate being “haled” into court there.

Commonwealth Capital Funding, Inc. v. Franklin

Square Hospital, 423 Pa.Super. 149, 620 A.2d 1154 (1993).

q18 Presently, the actions of the defendants in

assessing overdue taxes on Grimes’ status as a resident

of New York were in no way directed towards this

Commonwealth. Grimes was first notified of the tax

issues while he was in New York. All correspondence

was directed to his New York address and all inquiries

were made to his New York financial representative.

Moreover, the tax laws and guidelines at issue were

promulgated by the legislature in that state and are

most appropriately interpreted by that state’s courts—to

have this court make such legal determinations would

exceed this Commonwealth’s sovereign limitations.

World-Wide Volkswagen, supra.

lla

719 Once the Appellees supported their

jurisdictional objection, the burden shifted to Grimes to

prove that there is statutory and constitutional support

for the trial court’s exercise of jurisdiction over

Appellees. Hall-Woolford Tank Co., supra. After a

review of the facts, evidence and testimony in the record

we cannot find that Appellees’ contacts with

Pennsylvania support the exercise of specific personal

jurisdiction in this case. Id.

720 The trial court’s statement that the Appellees

caused Grimes to feel harm in Pennsylvania is specious

at best. In his complaint Grimes asserts the following -

“injuries” that resulted from Appellees’ conduct:

1. Grimes had been deprived of the right to

freely and without hindrance establish and

maintain his domicile in Pennsylvania.

2. Grimes has been deprived of the right to

travel freely and without hindrance between

Pennsylvania and New York.

3. Grimes has been subjected to great mental

and psychological stress and uncertainty.

4. Appellees’ actions have cast a cloud upon

Grimes’ entitlement to exercise the privileges of

citizens and residents of Pennsylvania.

5. Grimes is unable to establish the amount

of taxes he will have to pay in Pennsylvania

because Pennsylvania issues a tax credit for

persons who pay taxes to New York.

6. Grimes is uncertain as to whether he must

arrange for expensive hotel accommodations

while staying in New York to avoid being taxed

as a resident.

12a

7. Grimes is uncertain whether he can travel

to New York more than 30 days out of the year

without being taxed as a New York resident.

8. Grimes cannot make estate planning

decisions with confidence because he may be

determined a New York domiciliary at his —

decease and New York estate taxes would be

levied on his estate.

9. Harm is threatened to Pennsylvania in that

it will be deprived of revenues if plaintiff is

forced to pay taxes to New York.

q21 These so-called “injuries” are not of the type of

harm that our long-arm statute anticipates to give rise to

personal jurisdiction. Rather these effects are merely a

result of an out-of-state authority taxing a person who

lives in this Commonwealth; if we were to interpret such

“injuries” as falling within the ambit of section 5322(a)(4),

we would in essence be opening up the judicial

floodgates by creating personal jurisdiction in cases

where a foreign entity attempts to collect taxes owed by

another state’s residents—a highly common scenario.

q22 Additionally, even if Appellees were properly

served under this Commonwealth's long-arm statute, we

cannot find that the required constitutional “mimimum

contacts” exist in this case to confer personal jurisdiction

over Appellees. Although some of the Appellees, as

employees of a New York taxing authority, may have

traveled to this Commonwealth to investigate Grimes’

whereabouts (without success, nonetheless), this does

not automatically translate into activities where they

“availed themselves of the privilege of conducting

activities within [Pennsylvania]. . ., thus invoking the

‘benefit and protection’ of [Pennsylvania].” Burger King

13a

v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d

528 (1985). Such contact is by far attenuated and should

not form the basis of establishing the required

“minimum contacts” for personal jurisdiction in this case.

Appellees did not target this Commonwealth

their conduct. See Santana Prod., Inc. v. Bobrick

Washroom Equipment, 14 F.Supp.2d 710 (M.D.Pa.1998),

Finally, Appellees could not reasonably anticipate being

haled into court in Pennsylvania. Commonwealth

Capital Funding, supra.

723 Order reversed. Case dismissed. Jurisdiction

relinquished.

Judgment Entered.

/s/

Prothonotary

Date: Mar 23, 2000

14a

APPENDIX B

IN THE COURT OF COMMON PLEAS

CHESTER COUNTY, PENNSYLV

NO. 93-10226

CIVIL ACTION — EQUITY

CHARLES L. GRIMES

vs.

JAMES W. WETZLER, Individually and as

Tax Commissioner of the State of New York,

PHILIP ZURLO, WARREN BROWN, MARY ANN LINN

and SUNEIL MEHRA, Individually and as employees of

the Department of Taxation and Finance of the State of

New York, and NEW YORK, a municipal corporation

William H. Lamb, Esquire and James C. Sargent, Jr.,

Esquire, on behalf of the Plaintiff

Cathy A. Wilson, Esquire and Marcie S. Mintz, Esquire,

on behalf of the Defendants

ORDER

AND NOW, this 27th day of December, 1994, upon

consideration of the Preliminary Objections of Defendants

to Plaintiffs Complaint, Plaintiff's response and the oral

arguments presented, it is hereby ORDERED and

DECREED that said Preliminary Objections are

OVERRULED. It is further ORDERED that Defendants

shall file an Answer to Plaintiff's Complaint within twenty

(20) days of the date of this Order.

BY THE COURT:

/s/ Howard F. Riley, Jr.

15a

APPENDIX C

IN THE COURT OF COMMON PLEAS

CHESTER COUNTY, PENNSYLVANIA

NO. 93-10226

CIVIL ACTION — EQUITY

CHARLES L. GRIMES

vs.

JAMES W. WETZLER, Individually,

MICHAEL H. URBACH, as Tax Commissioner

_ Of the State of New York,

PHILIP ZURLO, WARREN BROWN, MARY ANN LINN

and SUNEIL MEHRA, Individually, and as

employees of the Dept. of Taxation and Finance

of the State of New York

William H. Lamb, Esquire and

James C. Sargent, Jr., Esquire,

on behalf of the Plaintiff

Cathy A. Wilson, Esquire and

Frederic L. Lieberman, Esquire,

on behalf of the Defendants

ORDER

AND NOW, this llth day of June, 1996, upon

consideration of Plaintiffs Motion for Sanctions and

Defendants’ Response thereto, it is hereby ORDERED and

DECREED that said Motion is DENIED, and it is further

ORDERED as follows:

léa

l. Defendants’ Motion for Reconsideration or

Amendment of this Court’s Order of December 17, 1994 is

DENIED;

' Background

Plaintiff, Charles L. Grimes, brought this action against the

Tax Commissioner of New York and several employees of the

Department of Taxation and Finance of the State of New York under

the Civil Rights Act of 1871, 42 U.S.C. Section 1983. Plaintiff seeks a

declaratory judgment that he is, and since 1978 has been, domiciled in

Pennsylvania and that defendants’ alleged harassment of him on the

grounds that he is domiciled in New York violates his constitutional

rights.

The defendants are James W. Wetzler, individually, Michael

H. Urbach, as Tax Commissioner of the State of New York, and Philip

Zurlo, Warren Brown, Mary Ann Linn and Suneil Mehra, individually and

as employees of the Department of Taxation and Finance of the State

of New York. Plaintiff alleges that the individual defendants have

“combined together and conspired” to engage in threatening practices

designed to harass and badger plaintiff into paying taxes to New York

on the basis of his alleged domiciliary in that state.

According to the Complaint, defendants have denied the

bona fides of plaintiff's change of domicile to the Commonwealth of

Pennsylvania, and have harassed and threatened him in the following

ways:

(1) Beginning with a telephone call from defendant

Mehra to Paul Czamowski, plaintiff's accountant, Mehra sought a

meeting and Czarnowski with respect to plaintiff's taxable year 1987.

(2) Czarnowski was unable to meet with defendant

Mehra at that time, to which Mehra expressed indignation and sent to

Czarnowski “an elaborate, burdensome and one-sided questionnaire .

.. designed to demonstrate that plaintiff was a New York domiciliary.”

(3) Defendant Mehra had several telephone

conversations with Czarnowski, insisting that they meet in a location

remote from and inconvenient to Czarnowski's office.

(4) Czarnowski repeatedly requested that they meet

in Czarnowski’s office, due to the voluminous documentation involved

and the fact that Czarnowski was on crutches.

(5) Czarnowski ultimately agreed to meet with

defendant Mehra in defendant's chosen location and together they

17a

reviewed all relevant documentation supporting plaintiff'snon-resident

Status. '

(6) Notwithstanding the fact that Mehra undertook to

arrange a further meeting to review the documentation in greater

detail, plaintiff received a notice assessing taxes for 1987 as a resident

of New York, without further communication from Mehra.

(7) After protestation by Czarnowski to Mehra’s

superior, defendant Zurlo, Zurlo asked if further review of the

documents could be conducted, to which Czarnowski agreed.

(8) The assessment was accordingly withdrawn and,

thereafter, defendant Mehra and her supervisor, defendant Linn,

further examined the documentation.

(9) Thereafter, defendants Mehra and Linn told

Czarnowski that plaintiff had been determined to be taxable as a

resident for 1987, on the basis that he had been present in the state for

more than 183 days in that year while maintaining a “permanent place

of abode” therein.

(10) At Czamowski’s request, defendants Mehra and

Linn sent their worksheets, upon examination of which plaintiff

determined that defendants had misinterpreted plaintiff's records.

(11) Another meeting followed, in which plaintiff and

Czamowski met with defendants Brown (supervisor of defendant Linn),

Linn and Mehra in Queens and pointed out defendants’ alleged errors.

(12) Defendants Linn and Mehra reviewed the

documents once again and subsequently concluded that plaintiff was

domiciled in New York and was taxable for 1987 as a resident of New

York on different grounds than had been previously determined, as a

result of which a formal notice of deficiency was served upon plaintiff.

Defendants filed preliminary objections, moving to dismiss

the complaint on the basis that this Court lacked personal jurisdiction

over them and alternatively that plaintiff had failed to exhaust his

administrative remedies.

By Order dated December 27, 1994, the Court denied

defendants’ preliminary objections and defendants timely moved for

reconsideration of that Order. On April 12, 1995, the Court granted

defendants’ request and, at the same time, entered an order staying all

depositions pending determination of defendants’ motion for

reconsideration.

18a

In June of 1995, a hearing was held before the New York

State Division of Tax Appeals . Based upon the evidence adduced at

the hearing, the Division of Taxation agreed to cancel the assessment

issued against plaintiff for taxes for the year 1987.

Subsequently, plaintiff filed a Motion for Sanctions seeking,

inter alia, denial of defendants’ Motion for Reconsideration and

sanctions by way. of recovery of counsel fees allegedly incurred by

plaintiff in connection with litigation on the issue of jurisdiction.

Defendants contend and have maintained since the inception

of this lawsuit that this Court does not have personal jurisdiction over

them because they do not conduct business, reside or maintain a

registered office in Pennsylvania.

Plaintiff alleges that the Court has long-arm jurisdiction

based on 42 Pa. Cons. Stat. Ann. §§5322 (a) (4) and 5322 (b) which confer

jurisdiction over persons who cause “harm or tortious injury in this

Commonwealth by an act or omission outside this Commonwealth.”

Subsequent to filing his Complaint, plaintiff learned through

discovery that the Department of Taxation and Finance of the State of

New York “maintains a network of collectors to collect New York taxes

and hold and remit the funds so collected as trustees for, and on

account of, the State of New York.” Additionally, plaintiff discovered

that “defendants Linn and Mehra, with the specific authorization,

approval and ratification of their superior, defendant Brown, have

traveled to Pennsylvania in May of 1992 and taken action within the

Commonwealth in furtherance of the matters of which plaintiff

complains.” On the basis of these activities, plaintiff contends that

personal jurisdiction is properly exercised on the basis of both specific

and general jurisdiction.

In their answer to plaintiff's Motion for Sanctions, defendants

deny that such conduct constitutes a basis for asserting jurisdiction and

avers that the system of tax collection to which plaintiff alludes is a

“statutory and regulatory scheme related to the collection of New

York Sales and Use tax, pursuant to which the Department of Taxation

and Finance is “the recipient of New York Use taxes collected by

various persons or entities as trustees for and on account of the State

of New York, based upon the use of the products that are shipped into

the State of New York.”

With respect to defendants’ trip to Pennsylvania, defendants

admit that Mehra and Linn traveled to Pennsylvania in search of the

address of the home of plaintiff, in an attempt to investigate his claim

the evidence in the light most favorable to the non-moving party.

Richard T. Byrnes Co. v. Buss Automation, Inc., 609 A. 2d 1360 (Pa.

Super. 1992). A court must generally accept as true all well and clearly

allegations upon the plaintiff. Gail v. Hammer, 420 Pa. Super. 512, 617

A. 2d 23 (1992). Rather, it is the defendant who challenges the court’s

exercise of jurisdiction who bears the burden of supporting such

objections by presenting evidence. Jd. Only after the defendant has

competent evidence to establish the court’s jurisdiction. Accu-

Weather v. Thomas Broadcasting Co., 425 Pa. Super. 335, 625 A. 2d 75

(1993).

Di ;

Section 5322 (a) (4) provides as follows:

(a) General rule. -A tribunal of this

Commonwealth may exercise personal

jurisdiction over a person (or the personal

_ Tepresentative of a deceased individual who

would be subject to jurisdiction under this

subsection if not deceased) who acts directly or

by an agent, as to a cause of action or other

matter arising from such person;

(4) Causing harm or tortious injury in

this Commonwealth by anact or omission outside

this Commonwealth.

42 Pa. CS. §5322 (a) (4).

The plain and clear meaning of this provision is that Section

5322 (a) (4) confers in personam jurisdiction over an individual who,

acting directly or through an agent, causes harm or tortious injury in

this Commonwealth by an act or omission outside this

Commonwealth.

Here, plaintiff alleges that defendants, acting under color of

state law, violated his constitutional rights by denying the bona fides

of his Pennsylvania domiciliary and engaging in acts of harassment on

the allegedly specious ground that he is domiciled in New York. Such

acts, as alleged, have deprived plaintiff, inter alia, of his right to

establish and maintain his domicile in this Commonwealth, to travel

freely between this Commonwealth and the State of New York, to

determine with confidence what amount of taxes to pay to the

Commonwealth, to make estate planning decisions with certainty and

to freely exercise his entitlement to the privileges of citizenship and

residency in this Commonwealth.

These allegations meet the test for asserting personal

jurisdiction under the Pennsylvania long-arm statute, defendants’

conduct having caused harm in this Commonwealth by actions taken

outside this Commonwealth, i.e., New York.

Having concluded that the statutory prerequisites are

satisfied, the Court must then determine whether the assertion of

personal jurisdiction is consistent with due process of law. Under the

principles articulated by the United States Supreme Court in

International Shoe Co. v. Washington, due process requires that the

defendant have “certain minimum contacts” with the forum state such

that the exercise of personal jurisdiction “does not offend ‘traditional

notions of fair play and substantial justice.” Internaiional Shoe Co. v.

Washington, 326 US. 310, 319-20 (1945).

Providing further clarification in Burger King Cor poration

v. Rudziewicz, 471 US. 462, (1985), the Court held that the

determination of whether sufficient minimum contacts exists is based

on a finding that the “defendant’s conduct and connection with the

forum siate are such that he should reasonably anticipate being haled

into court there.” Burger King, 471 US. at 472.

Critical to this analysis is the determination that the

defendant purposefully directed his activities at residents of the forum

and purposefully availed himself of the privilege of conducting

activities within the forum state, thus invoking the “benefit and

protection” of that state’s laws. Contacts with the forum that are

“random”, “fortuitous” or “attenuated” do not suffice. Id. at 475.

Burger King additionally states that

Where individuals ‘purposefully derive benefit’

from their interstate activities, [citation omitted]

it may well be unfair to allow them to escape

having to account in other states for consequences

that arise proximately from such activities; the

Due Process Clause maynot readily be wielded as

a territorial shield to avoid interstate obligations

that have been voluntarily assumed.

Id. at 473-474.

Moreover, the law is well-settled that certain intentional

conduct in one forum which has an effect in a second forum can be a

sufficient and valid basis for finding minimum contacts in the second

forum. Calder v. Jones, 465 U.S. 783 (1984).

Applying these principles to the case at bar, the Court finds

that the allegations of the complaint are sufficient to establish that this

Court has in personam jurisdiction over the defendants in this matter.

Itisclear that these defendants reached out and purposefully directed

their activities toward a resident of this Commonwealth and, by their

efforts to extract New York State taxes from plaintiff, caused harm felt

by plaintiff in Pennsylvania. Given their intentional and allegedly

tortious conduct, calculated to cause injury in Pennsylvania, it doesnot

offend traditional notions of fair play and substantial justice to conclude

that defendants could reasonably anticipate being haled into court in

Pennsylvania.

The Court concludes, therefore, that the defendants have

the requisite minimum contacts with Pennsylvania such that the

assertion of personal jurisdiction over them is constitutional.

Defendants also argue that personal jurisdiction does not

exist because any contacts that defendants may have had with the

Commonwealth were undertaken in their official capacities as

employees of the New York Department of Taxation and Finance.

The Court is mindful of the general rule that a court may not

exercise jurisdiction over individual officers and directors of a

corporation for acts taken in their corporate capacities. See Simpkins

Corporation v. Gourmet Resources International, 601 F. Supp. 1336

(E.D. Pa. 1985); Simpson v. Lifespring, Inc.,572 F. Supp. 1251 (E.D. Pa.

1983); aff'd without opinion, 770 F. 2d 1975 (3d. Cir. 1985); PSG

Professional Services Group, Inc. v. American Digital Systems, Inc.,

55 F. Supp. 788 (E.D. Pa. 1983).

However, the Court asserts jurisdiction over these

defendants in reliance upon the well-recognized exception that

jurisdiction may be exercised over a corporate officer who has been

personally and/or directly involved ina corporation's tortious conduct,

albeit in his/her corporate capacity. See Maleski By Taylor v. DP

Realty Trust, 653 A. 2d 54, 62 (Cmwilth. Ct. 1994) (citations omitted).

Application of this exception requires the Court to exercise

such factors as the officer’s position in the corporate structure, the

nature of the officer’s contacts with the forum and the extent of the

officer’s participation in the alleged tortious conduct. Jd. at 63.

The complaint alleges that defendant Wetzler is Tax

Commissioner of the State of New York and that defendants Zurlo,

Brown, Linn and Mehra are employees of the Department of Taxation

and Finance of the State of New York, and “are responsible to, are

agents of, and carry out the policies and instructions of, defendant

Wetzler.” ’ The complaint further alleges that defendants Zurlo, Brown,

Linn and Mehra actively participated in the alleged acts of harassment,

as previously described, and did so pursuant to clearly defined

guidelines specifically issued by defendant Wetzler effective February

17, 1998.

With respect to defendant Michael H. Urbach, he was joined

as a defendant in this action in his official capacity when he replaced

James W. Wetzler as Tax Commissioner of New York. Plaintiff avers

that employees acting under his direction, supervision and control

continued to engage in acts of harassment directed at plaintiff, a

Pennsylvania resident, and continued to demand and attempt to extract

New York State taxes from plaintiff, in violation of his constitutional

right to change his domicile and freely engage in interstate travel.

23a

2. Plaintiff's Motion to Strike Paragraphs 51 and 53 of

Defendants’ Answer if DENIED; and

3. Plaintiff's Motionfor an Order Deeming Admitted

Plaintiff's Requests for Admissions and for Sanctions is

DENIED. |

4. Plaintiff's Motionfor Reimbursement of Attorneys

Fees and Costs is DENIED.

BY THE COURT:

/s/ Howard F. Riley, Jr.

The Court finds the personal involvement of these defendants

sufficient to exercise personal jurisdiction over them, consistent with

due process protections of fair play and substantial justice.

2Aa

APPENDIX D

IN THE COURT OF COMMON PLEAS

CHESTER COUNTY, PENNSYLVANIA

NO. 93-10226

CIVIL ACTION — EQUITY

CHARLES L. GRIMES

vs.

JAMES W. WETZLER, Individually,

MICHAEL H. URBACH, as Tax Commissioner

of the State of New York,

PHILIP ZURLO, WARREN BROWN, MARY ANN LINN

and SUNEIL MEHRA, Individually and as

employees of the Department of Taxation and Finance

of the State of New York

William H. Lamb, Esquire and

James C. Sargent, Jr., Esquire,

on behalf of the plaintiff

Cathy A. Wilson, Esquire and

Frederic L. Lieberman, Esquire,

on behalf of the defendants

ORDER

AND NOW, this 13th day of November, 1997, upon

consideration of Defendants’ Motion to Dismiss and

Plaintiffs Answer thereto, it is hereby ORDERED and

DECREED that said motion is GRANTED in part and

DENIED in part as follows:

25a

1. Defendants’ Motion is GRANTED to the extent

that plaintiff seeks a declaration concerning his domicile

for any year other than 1987’; and

2. Defendants’ Motion is DENIED with respect to

plaintiff's request for relief pursuant to the Civil Rights Act

of 1871, 42 U.S.C. Section 1983"

‘The law of this Commonwealth is clear that declaratory

judgment relief is only available when an actual controversy exists.

The Pennsylvania Supreme Court held in Guinac ». South Butler

School District, 587 A. 2d 699, 701 (Pa. 1991), “fonly where there is a

real controversy, may a party obtain a declaratory judgment Ore

declaratory judgment must not be employed to determine rights in

anticipation of events which may never occur or for consideration of

moot cases or as a median for the rendition of an advisory opinion

which may prove to be purely academic.”

Although plaintiff seeks a declaration concerning his domicile as

of 1978, the only year in iesue is 1987. Plaintiff's Complaint alleges that

he believes that the defendants will attempt to collect taxesfrom him

in years subsequent to 1987; however, there are no specific facts

alleged to establish conduct for the collection of taxes for any year

other than 1987. At the conclusion of the New York State

administrative appeal process, the New York Division of Taxation

made a determination that Mr. Grimes was not a domiciliary of New

York as of 1987. A letter of determination to that effect was issued and

_ the deficiency of taxes for the year of 1987 was cancelled. Because the

issue of Mr. Grimes’ domicile in 1987 has been resolved, there is no

actual controversy between the parties that requires the intervention

of this court.

* InNational Private Truck Council, Inc. v. Oklahoma Tax

Commission, 115 S.Ct. 2351 (1995), the United States Supreme Court

held that “ §1983 does not provide for injunctive or declaratory relief

against a state tax, either in federal or state court, when an adequate

legal remedy exists.” Defendants contend that an adequate state

remedy is available inthe form of administrative procedures provided

by New York state law which Mr. Grimes has in fact used to challenge

the determination of his 1987 domicile.

Although the court would agree that these procedures provide

an adequate legal remedy with respect to the issue of Mr. Grimes’

26a

It is further ORDERED and DECREED that Plaintiff's

Motion for Partial Judgment on the Pleadings is DENIED.’

BY THE COURT:

/s/ Howard F. Riley, Jr.

domicile, they provide no redress for the alleged violations of his

constitutional rights. Plaintiffs claims that defendants’ attempt to

enforce the New York tax against him has infringed upon the exercise

of his constitutional right to establish his domicile and travel freely

between the states. The administrative procedures to which

defendants refer do not redress these alleged injuries, nor have

defendants cited any other legal remedies available under state law.

For the foregoing reasons, therefore, that portion of Plaintiff's

Complaint which seeks relief for the alleged deprivation of his

constitutional rights shall not be dismissed.

* Judgment on the pleadings is appropriate under

Pennsylvania Rule of Civil Procedure 1034 only when no facts are in

dispute. Further, when deciding such a motion, only those facts which

are specifically admitted can be used against a party. Sejpel v. Corson,

McKinley, MD's Inc., 445 Pa. Super. 427, 665 A. 2d 1198 (1995); Kelley v.

Nationwide Ins. Co., 414 Pa. Super. 6, 606 A. 2d 470 (1992); Felli v.Com.,

Dept. of Transp., 666 A. 2d 775 (Pa. Cmwith. 1995).

The only issue now before this court is whether defendants’

conduct in attempting to collect taxes from plaintiff for the year 1987

violated plaintiff's constitutional rights, an issue about which there are

clearly factual disputes. Plaintiff's motion is therefore denied.

APPENDIX E

IN THE COURT OF COMMON PLEAS

CHESTER COUNTY, PENNSYLVANIA

NO. 93-10226

CIVIL ACTION — EQUITY

CHARLES L. GRIMES

vs.

JAMES W. WETZLER, Individually,

MICHAEL H. URBACH, as Tax Commissioner

of the State of New York,

PHILIP ZURLO, WARREN BROWN, MARY ANN LINN

and SUNEIL MEHRA, Individually and as

employees of the Department of Taxation and Finance

of the State of New York

William H. Lamb, Esquire and

James C. Sargent, Jr., Esquire,

on behalf of the plaintiff

Cathy A. Wilson, Esquire and

Frederic L. Lieberman, Esquire,

on behalf of the defendants

ADJU DIC ATION

* * KK

CONCLUSIONS OF LAW

1. The Civil Rights Act of 1871, 42 U.S.C. Section 1983

provides:

Every person who, under color of any statute,

ordinance, regulation, custom, or usage, of any

State . . ., subjects, or causes to be subjected, any

280

citizen of the United States or other person within

the jurisdiction thereof to the deprivation of any

rights, privileges, or immunities secured by the

Constitution and laws, shall be liable to the party

injured in an action at law, suit in equity, or other

proper proceeding for redress.

2. ThisCourt has the authority and duty to entertain

actions under 42 U.S.C. Section 1983.’ E.g., Law v. Fisher,

41 Pa. Cmwlth. 389, 399 A.2d 453 (1979); Howlett v. Rose,

496 U.S. 356 (1990); Pa. Const. Art. I, Section 26.

* On November 13, 1997, this court issued an order denying

defendants’ motion to dismiss on the grounds that the New York state

administrative procedures “provide no redress for the alleged

violations of his [Grimes] constitutional rights.” In November of 1998,

relying upon the recent decision of Murtagh et al. v. County of Berks,

715 A. 2d 548 (Pa. Cmwith. 1998), defendants requested that the court

take another look at this pivotal issue. The court did so, and has again

concluded that, while defendants’ arguments are very compelling, the

New York administrative process does not afford Mr. Grimes an

opportunity for “plain, adequate and complete relief” with respect to

hisconstitutional claims. In Sunderland Properties, Inc. v. County of

Berks, 750 F. Supp. 704 (E.D. Pa. 1990), the federal district court stated:

“A plaintiff's state remedy is plain, speedy and efficient if it provides

the taxpayer with a full hearing and judicial determination at which

the taxpayer may raise federal constitutional objections.” Jd. at 707,

citing Rosewell v. LaSalle National Bank, 450 U.S. 508, 514 (1982). The

district court found the remedy to be plain, adequate and complete

because pursuant to the General County Assessment Law, specifically

42 PS. Sections 5020-518.1, the court of common pleas had broad

powers to grant appropriate relief, which would include the

consideration of constitutional issues. Jd. at 708-710. Defendants have

not demonstrated that the New York administrative process provides

anything more than a review of the actions of the New York State

Department of Taxation. Therefore, while this review process may be

the “exclusive remedy for review of a liability for personal income

tax”, as defendants state in their Supplemental Memorandum, there is

no indication that it provides a forum for Mr. Grimes to adjudicate his

federal constitutional objections.

29a

3. This Court has jurisdiction of this case under 42

Pa.C.S.A. Sections 5822 (a) (4) and 5822 (b). Calder v.

Jones, 465 U.S. 783 (1984), and Leonardo da Vinci's Horse,

Inc. v. O’Brien, 761 F. Supp. 1222 (E.D. Pa. 1991).

+k KH

DECREE NISI

AND NOW, this 20th day of January, 1999, it is hereby

ORDERED and DECREED that plaintiff's claims against

the defendants are DENIED and DISMISSED.

This Decree Nisi shall become Final Decree unless

post-trial motions are filed in accordance with Pa.R.C.P.

227.1 within ten days of its docketing.

BY THE COURT:

/s/ Howard F. Riley, Jr.

30a

APPENDIX F

IN THE COURT OF COMMON PLEAS

CHESTER COUNTY, PENNSYLVANIA

NO. 93-10226

CIVIL ACTION — EQUITY

CHARLES L. GRIMES

vs.

JAMES W. WETZLER, Individually,

MICHAEL H. URBACH, as Tax Commissioner

of the State of New York,

PHILIP ZURLO, WARREN BROWN, MARY ANN LINN

and SUNEIL MEHRA, Individually, and as

employees of the Dept. of Taxation and Finance

of the State of New York

ORDER

AND NOW, this 19th day of July, 1999, upon

consideration of Plaintiffs and Defendants’ Post-Trial

Motions, it is hereby ORDERED AND DECREED that

such motions are DENIED.

By the Court:

/s/ Howard F. Riley, Jr.

sla

APPENDIX G

IN THE SUPREME COURT OF PENNSYLVANIA

MIDDLE DISTRICT

Nos. 298 & 299 MAL 2000

CHARLES L. GRIMES,

Petitioner,

JAMES W. WETZLER, INDIVIDUALLY, AND

MICHAEL H. URBACH, AS TAX COMMISSIONER OF

THE STATE OF NEW YORK,

PHILIP ZURLO, WARREN BROWN, MARY ANN LINN,

AND SUNEIL MEHRA, INDIVIDUALLY AND AS

EMPLOYEES OF THE DEPARTMENT OF TAXATION

AND FINANCE OF THE STATE OF NEW YORK,

Respondents.

Petitions for Allowance of Appeal

from Order of the Superior Court

ORDER

PER CURIAM

AND NOW, this 6th day of February, 2001, the

Petitions for Allowance of Appeal are hereby DENIED.

TRUE & CORRECT COPY

ATTEST: FEB 7 2001

/s/ Shirley J. Phi

SHIRLEY J. PHIPPS

APPELLATE CLERK

32a

APPENDIX H

IN THE COURT OF COMMON PLEAS

CHESTER COUNTY, PENNSYLVANIA

JAMES W. WETZLER, individually and as

Tax Commissioner of the State of New York;

Defendants.

COMPLAINT FOR DECLARATORY JU. DGMENT

TO THE HONORABLE JUDGES OF THIS COURT, IN

EQUITY SITTING:

CHARLES L. GRIMES, plaintiff herein, brings by his

undersigned attomeys this his complaint against the

defendants above named, and thereupon complains and

says:

Plaintiff is a resident of the County of Chester,

Commonwealth of Pennsylvania.

33a

jae

Defendants are residents of the State of New York,

having their principal places of business in the City of

Albany, New York, in the case of defendant Wetzler, and

in the City of New York, in the case of the other

defendants.

Il.

This is an action for declaratory judgment pursuant

to 42 Pa. Cons. Stat. Ann. § 7531 et seq., for the purpose of

determining a question of actual controversy between

the parties as hereinafter more fully appears.

IV.

Jurisdiction of this action is based on 42 Pa. Cons.

Stat. Ann. § 7531.

This action is to secure a declaration of the rights

and relations of the parties so as to terminate the actual

substantial justiciable controversy between them set

forth hereinbelow, to-wit:

VI. The Parties and the Nature of This Suit

A. The Plaintiff

1. Plaintiff is, and all his life has been, a citizen,

domiciliary, and resident of the United States, and is, and

at all times after 1978 has been, a citizen, domiciliary, and

resident of the Commonwealth of Pennsylvania and of

this county, presently residing on Route No. 926, West

Marlborough Township (R.D. 2, West Grove).

2. Bom in the District of Columbia and originally

resident and domiciled therein, plaintiff was a

domiciliary of the State of New York at the beginning of

34a

1978 and for some time prior thereto. During that year

he changed his domicil to Pennsylvania, pursuant to the

right to do so freely and without hindrance which is

secured to him by the constitution of the United States;

all as is more fully set forth hereinbelow.

B. General Summary of the Wrongs Complained Of

and Their Effect in Pennsylvania

3. Plaintiff brings this suit under the Civil Rights

Act of 1871, 42 U.S.C. § 1983, for relief against acts and

threatened acts by defendants, acting under color of the

law and custom of the State of New York, which have

subjected, are now subjecting, and treaten in the future

to subject, plaintiff to the deprivation of rights,

privileges, and immunities secured to plaintiff by the

constitution and laws of the United States, to-wit: the

right and privilege of a citizen of the United States freely

and without hindrance to change his domicil from the

State of New York to the Commonwealth of

Pennsylvania and maintain it there; the right and

privilege of a citizen of the United States to travel freely

and without hindrance between States of the United

States; and the immunity of a citizen of the United States

from interference with, and harassment because of, his

exercise of such rights and privileges; all as is more fully

set forth hereinbelow.

4. This honorable Court has personal jurisdiction

over all defendants with respect to the matters herein

complained of, and all defendants may be served im this

county, under 42 Pa. Cons. Stat. Ann §§ 5322(a)(4) and

5322(b), in that the acts and threatened acts set forth

herein were and are expressly aimed and purposefully

directed at (a) plaintiff, a resident of this

Commonwealth and this county, (b) at this

Commonwealth, and (c) at plaintiffs change of domicil

to this Commonwealth and this county, all for the

pecuniary benefit of the State of New York and the

professional and personal advancement of

defendants; and by such acts, defendants have caused,

are causing, and unless restrained by this honorable

Court will continue to cause, harm and tortious injury in

this Commonwealth and this county in at least the

following respects, without limitation:

(a) Plaintiff has been deprived, is being

deprived, and if defendants persist in their

conduct will continue to be deprived, of the right

freely and without hindrance to establish and

maintain his domicil in this Commonwealth and

this county.

(b) Plaintiff has been deprived, is being

deprived, and if defendants persist in their

conduct will continue to be deprived, of the right

to travel freely and without hindrance between

this Commonwealth and this county, on the one

hand, and the State of New York, on the other

hand.

Commonwealth, to great mental and

psychological stress and uncertainty.

(d) The acts and threatened acts herein

complained of cast a cloud upon plaintiff's

entitlement to exercise within this

Commonwealth and this county the privileges of

citizens and residents thereof.

(e) Defendants are likely to seek to collect

from plaintiff within this Commonwealth and this

county, under 42 Pa. Cons. Stat. Ann. § 7551, taxes

and other exactions assessed on the basis of

36a

plaintiff's alleged domicil n New York pursuant

to the acts and threatened acts herein

complained of.

(f) Pursuant to the policies and guidelines

hereinbelow described, one or more of the

defendants, personally or through an agent or

person acting in combination with him, is likely to

demand to inspect plaintiff's home and “treasured

possessions” within this Commonwealth and this

county.

(g) Since the Commonwealth of

Pennsylvania grants a credit under certain

circumstances for taxes paid to the State of New

York and to New York City, plaintiff is unable to

determine with confidence what amount of

estimated taxes to pay to the Commonwealth for

the current year.

(h) Plaintiff is uncertain whether he can

travel from his home in this Commonwealth and

this county to New York on more than 30 days

out of the year without having taxes on a

resident basis asserted against him.

(i) Plaintiff is uncertain whether, as part of

his travel from this Commonwealth and this

county to New York, he must arrange for

expensive hotel accommodations, or can maintain

a pied-a-terre in New York for his convenience

without having taxes on a resident basis asserted

against him even though he spends little time

there.

(j) Plaintiff cannot make estate planning

decisions with confidence, since if plaintiff were

determined to be a New York domiciliary at his

37a

decease, New York estate taxes would be levied

on his estate, and New York would levy a gift tax

on inter vivos gifts made by plaintiff as a

domiciliary of New York.

(k) Harm is also threatened to the

Commonwealth of Pennsylvania itself, in that it

will be deprived of revenues if plaintiff is forced

to pay taxes to the State of New York as a

domiciliary thereof.

C. The Defendants

5. Defendant Wetzler is Tax Commissioner of the

State of New York, and is clothed by the constitution

and laws of the said state with the power and duty to

enforce the revenue laws thereof.

6. Defendants Zurlo, Brown, Lin, and Mehra are

employees of the Department of Taxation and Finance

of the State of New York, and are responsible to, are

agents of, and carry out the policies and instructions of,

defendant Wetzler. On information and belief, defendant

Zurlo is a District Audit Manager, defendant Brown is a

Section Supervisor, defendant Lin is a Group Supervisor,

and defendant Mehra is an Auditor.

7. All the defendants have combined together and

conspired to commit and threaten to commit the acts

herein complained of.

VII. Acts and Threatened Acts of Defendants

Herein Complained Of

A. Defendants’ Policies and Practices

8. The State of New York imposes, and at all times

material hereto has imposed, income taxes and other

personal taxes on residents and certain other persons.

38a

9. Persons deemed by the State of New York to be

“residents” for taxing purposes are taxed on all their

income, from sources both within and without the state.

10. The laws of the State of New York provide, and

at all times material hereto have provided, that

domiciliaries of the State of New York are taxed as

“residents” for income tax purposes with respect to a

taxable year, umless they both (a) maintain no

“permanent place of abode” in the state during that year

and (b) are not present in the state on more than 30 days

in that year. A day is counted for these purposes if the

domiciliary is present within the state for any portion,

however short, of a 24-hour calendar day.

11. In addition, the State of New York imposes

burdensome gift taxes on gifts made by domiciliaries of

the state, and burdensome estate taxes on the estates of

decedents who were domiciled in the state.

12. The laws of the State of New York provide, and

at all times material hereto have provided, that persons

who are not domiciliaries of the state of New York are

also taxed as “residents” for ncome tax purposes for a

taxable year if they maintain a “permanent place of

abode” in the state during that year and are present in

the state on more than 183 days im that year. A day is

counted for these purposes if the person is present

within the state for any portion, however short, of a 24

hour calendar day.

13. In order to impose such taxes upon as many

persons as possible, it is, and for many years (including

all times material to this action) has been, a conscious

and deliberate custom and policy of the State of New

York to harass United States citizens who are former

New York State domiciliaries mn order to extract taxes

39a

from them as if they were still New York State

domiciliaries, without regard for or deference to the

laws and policies of other states or rights secured by the

constitution and laws of the United States. Such

harassment takes, without limitation, such forms as the

following:

(a) Tax auditors and other officials challenge

the bona fides of the citizen's change of domicil.

(b) Burdensome tax audits are imposed on

such citizens, with accompanying threats to

assess taxes and associated fines, interest, and

penalties.

is placed on the citizen to prove that he has

exercised his constitutional right to change

domicil.

(d) In such proceedings, only evidence

allegedly supporting a continued New York

domicil is generally given weight, and evidence

supporting the exercise of the constitutional right

to change domicil is rejected or given little

weight.

(e) Trivial matters are taken as affording

significant support for the contention that the

constitutional right to change domicil has not

been exercised.

(f) Officials do not imquire into facts

supporting the exercise of the constitutional right

to change domicil, and inquire only into facts

allegedly supporting a continued New York

domicil.

40a

(g) The citizen is required to satisfy the

authorities that he has exercised his

constitutional right to change domicil not by the

normal preponderance of the evidence, but : oF

“clear and convincing” evidence.

(h) In practice, the citizen is presumed to be

lying.

(i) The citizen's only recourse is to an

administrative agency which is aggressively

disrespectful of the exercise of the constitutional

right to change domicil and whose

determinations receive judicial review only for

substantial evidence.

14. Where such a citizen maintains, or arguably

maintains, a “permanent place of abode” in the State of

New York, New York tax auditors and officials

commonly begin by seeking to establish taxability on a

resident basis by claiming that the citizen was present in

New York on more than 183 days out of the year, and

proceed to a claim of New York domicil if they find that

they are unable to support such a claim.

15. Such custom and policy has for many years

been implemented by the taxing authorities of the State

of New York and their employees, including defendants

Wetzler, Zurlo, Brown, Lin, and Mehra.

B. Defendants’ Application of Such Policies and

Practices to Plaintiff

1. Plaintiffs Domicil in Pennsylvania

16. Prior to 1978 plaintiff was a domiciliary and

resident of the State of New York.

4la

17. In or about 1978, plaintiff concluded that New

York was an increasingly unsafe place in which to live,

and that he wished to make his home ina cleaner, safer,

and more spacious and pleasant place, more

conveniently situated to most of his major clients.

18. Moreover, plaintiff was primarily engaged in

financial analysis and planning, and almost all the assets

of most of his clients were physically located in

Pennsylvania; moreover, substantially all such assets

that were located in New York belonged to persons who

were neither domiciliaries nor residents of New York.

19. Further, plaintiff was to be made executor of at

least one very substantial Pennsylvania estate; and was

so made and still so serves.

20. In addition, it was medically desirable for him to

move to the country. In his younger years plaintiff was

an active athlete, and among other athletic

accomplishments was an Olympic gold medalist;

however, with advancing years he found conventional

exercise more and more difficult, and was advised to get

his exercise by gardening and other outdoor work in the

country, where the air quality is presumably superior.

21. Plaintiff accordingly moved to rural Chester

County in the year 1979 with the intent to establish

domicil there permanently, and with the fixed intention

of forever abaiidoning any New York domicil.

22. Plaintiff has been domiciled in the

Commonwealth of Pennsylvania and in Chester County

continuously from that time to the present, intends to

remain domiciled in Pennsylvania permanently, and has

no intention or desire to be a domiciliary of New York.

42a

23. Plaintiff has paid income and other taxes to the

Commonwealth of Pennsylvania as a resident for every

year from 1979 to the present.

24. Defendants have taken the position that such

payment of Pennsylvania taxes constituted a voluntary

gift to the Commonwealth of Pennsylvania.

25. Plaintiff's only “voluntary gift” of taxes has in

fact been to the State of New York and to New York

City, as follows: Plaintiff rents a rent-controlled half-

apartment in New York City, affording him a substantial

saving in the cost of accommodation when he travels

from this Commonwealth to New York. In 1983, plaintiff

was advised that the Mayor of New York City had

announced that rent-controlled apartments might under

certain circumstances be decontrolled if the tenant did

not file New York state and city resident income tax

returns. Pursuant to such advice, to protect his interest

in his mexpensive accommodations, for some taxable

years since that time plaintiff has voluntarily filed New

York state and city resident income tax returns.

2. Actions Hitherto Taken by Defendants Pursuant to

the Policies and Practices Complained Of

26. Pursuant to the policies and practices of the

state of New York and of defendants as hereinabove

described, defendants have denied the bona fides of

plaintiffs change of domicil, and have harassed and

threatened plaintiff and demanded taxes from him, in

the following ways, among others:

27. Application of such policies and practices to

plaintiff began with a telephone call from defendant

Mehra to Paul Czarnowski, the accountant who advises

and represents plaintiff with respect to New York tax

matters, seeking a meeting with respect to plaintiff's

taxable year 1987.

28. At that time Czarnowski was suffering from a

severe knee injury and was unable to meet with

defendant Mehra. Defendant Mehra expressed

indignation at Czarnowski’s inability to meet with him,

and sent to Czarnowski for plaintiff an elaborate,

burdensome, and one-sided questionnaire evidently

designed to demonstrate that plaintiff was a New York

domiciliary.

29. Defendant Mehra thereafter held several

telephone conversations with Czarnowski, insisting that

plaintiff and/or Czarnowski meet with him im the

Borough of Queens, a section of New York City known

by defendant Mehra to be far remote from, and

inconvenient to, Czarnowski’s office in the Borough of

Manhattan.

30. Czarnowski repeatedly requested that

defendant Mehra meet with him and plaintiff at

Czamowski's office, pointing out that the relevant

documentation was heavy and voluminous; that under

such circumstances it was customary for auditors to

examine it at the accountant’s or the taxpayer's office,

and that he, Czarnowski, was on crutches and that it

would be difficult for him to carry bulky documentation

to a remote location nm Queens. Defendant Mehra

refused this elementary courtesy and imsisted that

Czarnowski come to Queens.

31. Czarnowski accordingly met with defendant

Mehra in Queens. He took with him various relevant

documents supporting plaintiffs non-resident status,

including, without limitation, credit card charges, utility

bills, telephone bills, and other material bearing on the

44a

number of days plaintiff had been present in New York

not only during the year in question but during 1988 and

1989 as well. He reviewed such documentation with

defendant Mehra for at least one-half of a full business

day. Defendant Mehra asked that the documents be left

with him. Czarmowski objected to doing so, since

defendant Mehra could not guarantee their safety. He

offered to defendant Mehra a private room at his own

office for whatever period of time defendant Mehra

might want to take, in order to examine this and other

relevant documentation for as long, and in as great

detail, as he might desire. Defendant Mehra undertook

to arrange such a further meeting.

32. Notwithstanding defendant Mehra’s

undertaking, plaintiff, through Czarnowski, then received

a notice assessing taxes for 1987 as a resident of the

State of New York, without any further communication

from defendant Mehra or any other representative of

the State of New York. Such an event was unique in

Czarnowski’s more than 30 years of experience. He

accordingly protested by telephone to defendant Zurlo,

as defendant Mehra’s superior. Defendant Zurlo asked

whether there was any objection to further review of

the documentation. Czarnowski responded that there

was no objection, provided a competent and qualified

person conducted the review.

33. This assessment was accordingly withdrawn,

and thereafter defendant Mehra, accompanied by his

supervisor, defendant Lin, spent at least one day and

perhaps more at Czarnowski’s office examining the

documentation.

34. Thereafter, defendants Mehra and Lin told

Czarnowski by telephone that plaintiff had been

determined to be taxable as a resident for 1987, on the

45a

basis that he had been present in the state for more than

183 days in that year while maintaining a “permanent

place of abode” therein. At Czarmowski’s request,

defendants Mehra and Lin sent him their worksheets.

Upon examination of these it transpired that defendants

Mehra and Lin had systematically misinterpreted

plaintiffs records, including listing all calls charged to

plaintiff's New York telephone as showing that plaintiff

was in New York on that day, even though plaintiff's

telephone bills showed plainly that such calls had been

made by credit card from locations outside New York.

30. Thereafter, plaintiff and Czarnowski met with

defendants Brown (supervisor of defendant Lin), Lin, and

Mehra in Queens, and pointed out the many errors

committed by defendants Lin and Mehra. Defendants

Lin and Mehra asked to return to Czamnowski’s office to

review the documents once again.

36. Such further review took place. On leaving,

defendants Lin and Mehra conceded that plaintiff had

not been in New York for anything approaching 183 days

in 1987. When asked by plaintiff and Czarnowski if this

did not dispose of the matter, they replied that they

must discuss it with their superiors.

37. Subsequently, defendant Mehra telephoned

Czarnowski and advised him that it had been now

determined that plaintiff was domiciled n New York

and, since he had concededly been in New York on more

than 30 days in 1987, was taxable for that year as a

resident on that basis. Thereafter, a formal notice of

deficiency assessing New York State taxes for that year

on a resident basis was served upon plaintiff, through

Czarnowski, by mail.

4oa

38. Such assessment was issued, and the entire

course of dealing leading up to it was conducted, in bad

faith by defendants, with the intent to harass and badger

plaintiff into paying taxes to New York on a resident

basis, and thereby nullify plaintiff's exercise of the right

secured to him by the constitution of the United States

to change his domicil from the State of New York to this

Commonwealth and maintain it here.

3. Anticipated Continuation of Such

Activities by Defendants

39. Plaintiff reasonably expects that defendants will

continue to apply the practices and policies herein

complained of, not only to plaintiff's taxable year 1987

but to other taxable years; to his estate when that time

comes; and to any gifts he may make in the meantime.

Such expectation is based not only on the longstanding

custom and practice of defendants, but on the issuance

of “guidelines” by defendant Wetzler which promise to

continue and intensify such activity, as is set forth in

more detail hereinbelow.

40. On information and belief, defendant Wetzler, on

or about February 28, 1993, admitted to a reporter of

The New York Times, as reported in that newspaper on

March 1, 1993, that he was “worried by a mountain of

anecdotal evidence that the auditors are doing more to

hurt than help the state’s economy,” because “out of

anger or to make sure they are not considered residents,

many people have closed bank and brokerage accounts;

sold businesses in the state; stopped using New York

professionals like accountants, doctors, and dentists;

stopped giving to New York charities and politicians;

limited trips to New York, and even avoided taking

vacations in the state.” A true and correct copy of the

cited story from The New York Times is attached

47a

hereto as Exhibit 1 and is incorporated herein by

reference as fully as if herein set forth.

41. Effective February 17, 1993, defendant Wetzler

issued guidelines for auditors, which, according to

Exhibit 1, were “aimed at reining in overly zealous state

tax agents who try to prove that people who say they

live elsewhere are actually state residents — at least for

tax purposes.” A true and correct copy of such

guidelines is attached hereto as Exhibit 2 and is

incorporated herein by reference as fully as if herein set

forth.

42. Such guidelines in fact do not “rein in” the

auditors and other officials of the State of New York,

including the state defendants herein, but rather

formalize many of the intrusive and threatening

practices employed for years to harass citizens who

have sought to exercise their constitutional right to

change their domicil. For example:

(a) Not only does the burden of proof

continue to be imposed on the citizen to prove

that he has exercised his constitutional right to

change domicil, but he is still obliged to satisfy

the auditors that he has done so by “clear and

convincing evidence.” Exhibit 2, pp. 2-3, 10, 44.

(b) Auditors are encouraged to intrude upon

citizens by visiting and walking through their

residences, and to obtain pictures or a videotape

of the premises. Exhibit 2, pp. 12, 37.

citizens’ private lives by making an “analysis of

the taxpayer’s family connections,” ascertaining

whether they have “retained deep and

substantial ties with their children and

48a

grandchildren,” and concluding, if so, that “quality

time” with them is “a central part of the

taxpayer's lifestyle, and as a result there is not

change in lifestyle or abandonment of the

established domicile.” Exhibit 2, p. 18.

(d) Auditors are instructed to pry into the

citizen's “typical pattern and general lifestyle,

hobbies, how time is spent on weekends, etc.”

Exhibit 2, p. 37.

(e) Auditors are encouraged to pry into

whether individual items of citizens’ personal

property are “family heirlooms, treasured

possessions, etc.” Exhibit 2, p. 12.

(f) Auditors are encouraged to pry into what

“pets, personal items or other sentimental

possessions . . . the taxpayer holds ‘near and dear

to their heart,” including “family heirlooms,

works of art, collections of books, stamps and

coins, and those personal items which enhance

the quality of lifestyle,” and even into whether

they were “moved by a first rate carrier” or by U-

Haul, demanding evidence in the form of bills of

lading and insurance statements. Exhibit 2, pp.

16-17, 41.

(g) Auditors are directed to enquire of the

citizen whether the citizen's children are

receiving any grants, awards, or scholarships, and

into whether there were “any special occasions

celebrated during the year.” Exhibit 2, p. 37.

(h) Auditors are instructed to scrutinize the

citizen’s cancelled checks for “such personal

expenses as groceries, hairdressers, club dues,

and entertainment.” Exhibit 2, p. 40.

49a

(7) Auditors are encouraged to inquire into

the activities of citizens’ domestic help. Exhibit 2,

p. 15.

(j) Auditors are encouraged to question the

size and value of the citizen's new home and

former New York homes. Exhibit 2, p. 13.

(k) Auditors are encouraged to question

whether citizens have listed their former New

York homes at a reasonable price and the degree

of activity citizens are devoting to sale of their

former New York homes. Exhibit 2, p. 12.

(2) Although New York, and in particular

New York City, are well known as commuter

regions, where many scores of thousands of

persons work in the city while living outside it,

including scores of thousands who live in

Connecticut, New Jersey, or Pennsylvania,

auditors are directed to treat any involvement by

a citizen in New York business activity as a “major

factor in determining a domicile issue,” to treat

evidence showing “material participation” for

federal income tax purposes as evidence of non-

exercise by the citizen of his constitutional right

to change domici!, and even to challenge the

turning over of a family business to the next

generation. Exhibit 2, pp. 15-16.

(m) Even where a citizen has maintained logs

and diaries showing his presence in or absence

from New York day by day, auditors are

encouraged to disbelieve these and to demand

corroborating evidence such as credit card

receipts, utility bills, bank information, and

telephone bills. Exhibit 2, pp. 18, 41.

50a

(n) Auditors are encouraged to attempt to

persuade citizens to claim New York domicil by

pressing upon them the alleged advantages of

certain tax deferrals or exclusions allowed to

domiciliaries by New York with respect to gain

from the sale of a New York residence. Exhibit 2,

p. 14.

(o) Auditors are provided with a six-page

“long-form questionnaire- [which] is designed

specifically for an individual where domicile is an

issue which must be addressed during the audit,”

which “seek{s] information concerning all aspects

of the taxpayer’s involvement in New York’s

social, family, and business scene,” and “may place

a heavy burden on the taxpayer” but which is

nevertheless not to “restrict the auditor's

creativity.” Exhibit 2. p. 36. Such questionnaire

covers six pages, and focuses on information

calculated to disprove the exercise by the citizen

of his constitutional right to change domicil, with

little attention to contrary factors. Exhibit 2,

Appendix 3.

(p) Auditors are provided with summaries of

28 New York agency and court cases dealing with

domicil and residence, in not more than four of

which were the citizen’s contentions upheld.

Exhibit 2, Appendix 4.

43. Defendants Wetzler, Zurlo, Brown, Lim, and

Mehra, and all other employees of the Department of

Taxation and Finance of the State of New York, are

bound by and will follow the guidelines aforesaid.

5la

C. The Effects and Threatened Effects

of Defendants’ Acts

44, Plaintiff's freedom to change his domicil from

the State of New York to the Commonwealth of

Pennsylvania is a right and privilege of United States

citizenship, and the constitution and laws of the United

States secure to him the right and privilege to do so, and

secure to him immunity from interference with, and

harassment of his exercise of, such right and privilege.

45. Plaintiff is obliged to visit New York City from

time to time on business and for medical reasons.

Plaintiffs freedom to travel freely and without

hindrance between the Commonwealth of Pennsylvania

and the State of New York is a right and privilege of

United States citizenship, and the constitution and laws

of the United States secure to him the right and

privilege to do so, and secure to him immunity from

interference with, and harassment of his exercise of,

such right and privilege.

46. The acts and threatened acts of defendants

hereinabove set forth have deprived, are depriving, and

unless relief is afforded by this honorable Court will

continue to deprive plaintiff of such rights, privileges,

and immunities, in at least the following respects,

without limitation:

(a) Plaintiff has been, is being, and unless

relief is afforded by this honorable Court will

continue to be, subjected to harassment and

intimidation designed to deprive him of such

rights, privileges, and immunities.

(b) Plaintiff has been, is being, and unless

relief is afforded by this honorable Court will

continue to be in fact deprived of such rights,

52a

privileges, and immunities, in that the exaction or

attempted exaction from plaintiff, a non-

domiciliary, of taxes which can only be imposed

on domiciliaries deprives plaintiff of his

constitutional right freely and without hindrance

to change domicil, and the threat to impose such

taxes upon plaintiff based upon travel between

his domicil in the Commonwealth of

Pennsylvania and the State of New York, and

upon matters incident thereto, deprives plaintiff

of his constitutional right freely and without

hindrance to travel between such places.

47. The acts and threatened acts of defendants

hereinabove set forth have caused, are causing, and

unless relief is afforded by this honorable Court will

continue to cause, harm and tortious injury im this

Commonwealth and this county in at least the respects

set forth in paragraph 4 hereinabove, without limitation.

VI.

The harm and injury inflicted and threatened to be

inflicted upon plaintiff by the acts of defendants herein

complained of are irreparable by a money judgment.

Plaintiff has no adequate remedy at law or before any

administrative agency to redress the harm and injury,

and prevent the threatened harm and injury, herein

complained of.

Vil.

Plaintiffs domiciliary status, at issue in this

proceeding, has an effect on the determination of taxes

payable by him to the Commonwealth of Pennsylvania,

in that the Commonwealth allows certain credits against

its own taxes, including income taxes, for certain taxes,

including income taxes, paid to New York. Accordingly,

53a

the Attorney General is being served with a copy of this

complaint pursuant to 42 Pa. Cons. Stat. Ann. § 7540(b).

Vil.

WHEREFORE, THE PREMISES CONSIDERED,

PLAINTIFF PRAYS:

1. That this honorable Court take jurisdiction of

this suit, and issue its process to the defendants,

requiring them to appear and make answer to this

complaint and abide by the decrees of this honorable

Court or suffer a decree pro confesso to be issued

against them.

2. That upon hearing, this honorable Court issue

its decree declaring that plaintiff is, and at all times after

1978 has been, a domiciliary of the Commonwealth of

Pennsylvania and not of the State of New York; and that

efforts by defendants to exact taxes from plaintiff on the

basis of plaintiff's alleged domicil in the State of New

York for any taxable year after 1978 constitute

deprivation of rights, privileges, and immunities secured

to plaintiff by the constitution and laws of the United

States, under color of the law and custom of the State of

New York, in violation of the Civil Rights Act of 1871, 42

U.S.C. § 1983.

3. That this honorable Court award to plaintiff,

against defendants in their individual capacities, such

damages as may to this honorable Court seem just and

allowable, together with his costs of suit and a

reasonable attorney's fee.

4. That this honorable Court retain jurisdiction of

this suit.

dda

AND PLAINTIFF PRAYS for such other, further, or

different relief as he may be entitled to in the premises.

THADDEUS HOLT

Attorney Id. No. 43000

c/o Lamb, Windle & McErlane, P.C.,

2A East Market Street

P.O. Box 565

West Chester, Pennsylvania 19381

215-430-8000

PATRICK W. KITTREDGE

Attorney Id. No. 08556

Kittredge, Donley,

Elson, Fullem & Embick

421 Chestnut Street

Philadelphia, Pennsylvania 19106

215-829-9900

WILLIAM H. LAMB

November 5, 1993

Attorney Id. No. 04927

Lamb, Windle & McErlane, P.C.,

24 East Market Street

P.O. Box 565

West Chester, Pennsylvania 19381

215-430-8000

Attorneys for Plaintiff

(Exhibits not reproduced)

56a

APPENDIX I

Material Required by Rule 14(1)(g)(i)

See Appendix G, Complaint, setting forth basis of

personal jurisdiction; Appendix B, Order of the Trial

Court, December 27, 1994, denying motion to dismiss for

want of personal jurisdiction, Appendix C, Order of the

Trial Court, June 11, 1996, denying motion for

reconsideration of Order of December 27, 1994;

Appendix E, Excerpts From Adjudication and Order Nisi

of the Trial Court, January 20, 1999, reiterating holding as

to personal jurisdiction, Appendix F, Final order of the

Trial Court, July 19, 1999, denying post-trial motions;

Appendix A, Opinion and Order of the Superior Court of

Pennsylvania, March 23, 2000, reversing as to personal

jurisdiction, Appendix G, Order of the Supreme Court of

Pennsylvania Denying Leave To Appeal, February 6,

2001.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.