Folio v. City of Clarksburg, W.Va.

• Citation: 134 F.3d 1211
• Decision Date: 26 January 1998
• Docket Number: No. 97-1628,97-1628
• Parties: Bernard J. FOLIO; Mid-city Land Company; Bernard J. Folio, d/b/a High Rise Associates, Incorporated; Grandeotto, Incorporated; Kathryn Folio; Joseph A. Folio, Plaintiffs-Appellants, v. THE CITY OF CLARKSBURG, WEST VIRGINIA, a West Virginia municipal corporation; Frank Ferrari, Director of Finance for the City of Clarksburg, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1211

134 F.3d 1211

Bernard J. FOLIO; Mid-city Land Company; Bernard J. Folio,

d/b/a High Rise Associates, Incorporated;

Grandeotto, Incorporated; Kathryn

Folio; Joseph A. Folio, Plaintiffs-Appellants, v. THE CITY OF CLARKSBURG, WEST VIRGINIA, a West Virginia

municipal corporation; Frank Ferrari, Director of

Finance for the City of Clarksburg,

Defendants-Appellees.

No. 97-1628.

United States Court of Appeals, Fourth Circuit.

Argued Oct. 27, 1997.

Decided Jan. 26, 1998.

ARGUED: Thomas G. Eddy, Eddy & Osterman, Pittsburgh, PA, for Appellants. Gregory Alden Morgan, Young, Morgan & Cann, Clarksburg, WV, for Appellees. ON BRIEF: J. Cecil Jarvis, McNeer, Highland & McMunn, Clarksburg, WV, for Appellants.

Before LUTTIG, Circuit Judge, CAMPBELL, Senior Circuit Judge of the United States Court of Appeals for the First Circuit, sitting by designation, and TRAXLER, United States District Judge for the District of South Carolina, sitting by designation.

Affirmed by published opinion. Judge TRAXLER wrote the opinion, in which Judge LUTTIG and Senior Judge CAMPBELL joined.

OPINION

TRAXLER, District Judge:

Appellants brought this action pursuant to 28 U.S.C.A. § 2201(a) (West 1994) and 42 U.S.C.A. § 1983 (West Supp.1997) against the City of Clarksburg, West Virginia ("the City") and Frank Ferrari, Director of Finance for Clarksburg, seeking a judgment declaring unconstitutional an ordinance that imposes a fee for municipal services and an injunction against the future collection of the fee. Appellants challenge the ruling of the district court that the Tax Injunction Act precludes federal subject matter jurisdiction. See 28 U.S.C.A. § 1341 (West 1993). We affirm.

I.

West Virginia law bestows upon a municipality which furnishes essential municipal services such as police or fire protection "plenary power and authority to provide by ordinance for the installation, continuance, maintenance or improvement of such service, to make reasonable regulations with respect thereto, and to impose by ordinance upon the users of such service reasonable rates, fees and charges to be collected in the manner specified in the ordinance." W. Va.Code § 8-13-13 (1990). Enabled by this statute, the City enacted an ordinance imposing fees upon property owners and occupiers within the City for fire protection services. See Clarksburg, W. Va. Ordinances part 9, ch. 5, §§ 957.01, 957.11 (1983) (as amended). The amount of the fee is tethered to the classification of each property owner as "residential" or "non residential," requiring residential owners to pay a flat fee and non-residential owners to pay a fee determined by reference to the square footage of their property. See id. at § 957.11(a). ¹ Appellants own real property within the City's corporate boundaries and are classified as nonresidential property owners. See id. at § 957.02(d).

In 1993 and 1994, the City commenced several actions against appellants, which were later consolidated into a single lawsuit in the Circuit Court of Harrison County, West Virginia, to collect unpaid fire protection service fees previously assessed against appellants. The parties filed cross-motions for summary judgment. Appellants argued to the state tribunal that the imposition of the fees constituted equal protection and due process violations under both the state and federal constitutions. The state court acknowledged appellants' assertion that the fire protection service fee "violates the Due Process and Equal Protection Clauses of the United States ... Constitution[ ]," see City of Clarksburg v. Grandeotto, Inc., et al., Circuit Court, Harrison County, West Virginia, No. 93-C-609-2 at 10 (July 24, 1997) ("Memorandum of Decision"), but granted summary judgment in favor of the City and ordered appellants to pay their outstanding fire protection service fees. The West Virginia court expressly determined that appellants "failed to meet their burden of proving that the classifications selected by the City are arbitrary and unreasonable" or that "they were treated differently from other property owners in their same classifications." Id. at 13.

While the state court action was pending, appellants initiated this action in federal district court against the City. Appellants sought a declaratory judgment that the ordinance, as it relates to fire protection services, violates the due process and equal protection clauses of the Fourteenth Amendment, and requested injunctive relief against the City to prevent future collection or assessment of the fees. Concluding that the Tax Injunction Act barred it "from enjoining, suspending or restraining the assessment, levy or collection of the [o]rdinance" or "issu[ing] a declaratory judgment holding the [o]rdinance unconstitutional," the district court granted the City's motion to dismiss for lack of subject matter jurisdiction. J.A. 24. Appellants urged the district court to find the Tax Injunction Act inapplicable because West Virginia state law provides no adequate or certain remedy to challenge the ordinance. The district court rejected this argument and noted that the only uncertainty was whether appellants would prevail on the merits of their claim in state court. See id. at 23. Additionally, the district court found, contrary to appellants' insistence, that the fire service protection fee is a tax subject to the Tax Injunction Act because the ordinance raised revenue for the public benefit and was not "in the nature of a privilege fee." See id. (internal quotation marks omitted).

II.

The Tax Injunction Act provides in its totality that "[t]he district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State." 28 U.S.C.A. § 1341. This statutory provision is a jurisdictional bar that is not subject to waiver, and the federal courts are duty-bound to investigate the application of the Tax Injunction Act regardless of whether the parties raise it as an issue. See Collins Holding Corp. v. Jasper County, South Carolina, 123 F.3d 797, 799 & n. 1 (4th Cir.1997). The Tax Injunction Act is undergirded by a policy of restraint in the federal courts, which, save limited exceptions, are "under an equitable duty to refrain from interfering with a State's collection of its revenue" in light of "the imperative need of a State to administer its own fiscal operations." Tully v. Griffin, Inc., 429 U.S. 68, 73, 97 S.Ct. 219, 222, 50 L.Ed.2d 227 (1976). Essentially, "the Act ... [is] first and foremost a vehicle to limit drastically federal district court jurisdiction to interfere with so important a local concern as the collection of taxes." Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503, 522, 101 S.Ct. 1221, 1234, 67 L.Ed.2d 464 (1981). It is settled that the broad prophylactic terms of the Tax Injunction Act apply to declaratory as well as injunctive relief, see California v. Grace Brethren Church, 457 U.S. 393, 411, 102 S.Ct. 2498, 2509, 73 L.Ed.2d 93 (1982), and that local taxes fall within the ambit of the statute, see Collins Holding Corp., 123 F.3d at 799 n. 2. Moreover, the Tax Injunction Act applies to actions where, as here, a taxpayer seeks injunctive or declaratory relief under § 1983. See Rosewell, 450 U.S. 503, 101 S.Ct. 1221, 67 L.Ed.2d 464. Only when state law provides no "plain, speedy and efficient" remedy may a federal district court order declaratory or injunctive relief that trenches upon "the assessment, levy or collection" of any state or local tax. See Grace Brethren Church, 457 U.S. at 411, 102 S.Ct. at 2509; see also Strescon Indus., Inc. v. Cohen, 664 F.2d 929, 931 (4th Cir.1981) (explaining that "[t]he only exception contemplated by Congress relates to State remedies which are not plain, speedy, or efficient").

Mindful of these principles, we turn to address appellants' contention that the district court erroneously dismissed their action for lack of subject matter jurisdiction, applying a de novo standard of review. See Tillman v. Resolution Trust Corp., 37 F.3d 1032, 1034 (4th Cir.1994). Appellants advance a two-fold argument. First, they maintain that the "plain, speedy and efficient" exception applies here, allowing the district court to exercise jurisdiction over their action for declaratory and injunctive relief against the City. Second, they contend that the district court was not prohibited from entertaining their suit because the City's ordinance does not impose a "tax" within the meaning of the Tax Injunction Act. For the reasons set forth below, we find both contentions meritless.

A.

"On its face, the 'plain, speedy and efficient remedy' exception appears to require a state-court remedy that meets certain minimal procedural criteria." Rosewell, 450 U.S. at 512, 101 S.Ct. at 1229 (emphasis in original). The essential question is whether the state remedy "provides the taxpayer with a 'full hearing and judicial determination' at which she may raise any and all constitutional objections to the tax." Id. at 514, 101 S.Ct. at 1230. Stated differently, the taxpayer is entitled to a meaningful opportunity to assert federal constitutional challenges to the tax in state court. See McKesson Corp. v. Division of Alcoholic Beverages & Tobacco 496 U.S. 18, 39, 110 S.Ct. 2238, 2251-52, 110 L.Ed.2d 17 (1990). Thus, a real or perceived defect in the substantive remedy afforded a taxpayer under state law does not clothe the district court with jurisdiction to hear appellants' claims. See Strescon Industries, 664 F.2d at 931 (observing that where "otherwise adequate [s]tate procedures" exist, "an asserted substantive defect in the [s]tate remedy, even if found to exist, is an insufficient basis upon which [f]ederal jurisdiction may be grounded").

In addition to meeting minimal procedural safeguards, the state remedy must be certain--state remedies that are merely speculative will not divest the federal courts of...