143 F.3d 1006 (5th Cir. 1998), 97-60285, Home Builders Ass'n of Mississippi, Inc. v. City of Madison, Miss.
|Citation:||143 F.3d 1006|
|Party Name:||HOME BUILDERS ASSOCIATION OF MISSISSIPPI, INC.; Mark S. Jordan; Good Earth Development, Inc.; Mark S. Jordan, Inc.; Highland Ridge Partners, LP; SMCDC, Inc.; Post Oak Place; Locust Lane Partners, L.P.; William J. Shanks; WJS & Associates, Inc.; South Madison County Development Company; Thomas M. Harkins, Sr; Thomas M. Harkins, Jr.; North Place Deve|
|Case Date:||July 01, 1998|
|Court:||United States Courts of Appeals, Court of Appeals for the Fifth Circuit|
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Steven H. Smith, Taylor, Covington & Smith, Joel W. Howell, III, Jackson, MS, for Plaintiffs-Appellants.
Terry R. Levy, Paul Vegas Ott, Daniel, Coker, Horton & Bell, Jackson, MS, for City of Madison, MS, Hawkins, Johnson and Clingan-Smith.
Charles G. Copeland, William Matthew Vines, Copeland, Cook, Taylor & Bush, Jackson, MS, for Butler, Dunn and Weaver.
Appeals from the United States District Court for the Southern District of Mississippi.
Before WISDOM, JOLLY and HIGGINBOTHAM, Circuit Judges.
WISDOM, Senior Circuit Judge:
The sole question before us is whether the Tax Injunction Act of 1937 bars a federal district court from exercising jurisdiction over a plaintiff's complaint that a municipal impact fee ordinance violates the Fifth and Fourteenth Amendments to the United States Constitution. The district court held that it does, and therefore dismissed the complaint for want of subject matter jurisdiction. We affirm.
In 1986, the city of Madison, Mississippi, adopted an impact fee ordinance that required developers and builders in new residential areas to pay a $700 impact fee for each planned residential dwelling unit as a necessary condition to obtaining a building permit. Madison passed the ordinance to alleviate the problems attendant to providing and maintaining essential municipal services and facilities in the rapidly-growing city. Under the terms of the ordinance, collected funds were to be appropriated in a manner consistent with a contemporaneously-adopted public improvement plan that was designed to guide the future development of public facilities. 1
In 1995, Home Builders Association of Mississippi ("Home Builders") and an assortment of others filed a suit under 42 U.S.C. § 1983 against the City of Madison in which they sought (1) a declaration that the impact fee ordinance was unconstitutional, (2) an injunction prohibiting the assessment, collection and expenditure of impact fees, and (3) a refund of all impact fees collected in advance of the litigation. 2 Home Builders's complaint specifically alleged that "the assessment, collection and expenditure of any and all impact fees by Madison ... represents and constitutes nothing more than an improper, unlawful and unconstitutional form of taxation or general tax."
Madison moved to dismiss the case under Rule 12(b)(1) of the Federal Rules of Civil Procedure on the ground that the Tax Injunction Act removed it from the scope of the district court's subject matter jurisdiction. The district court denied the motion but stated that it "may reconsider [the matter] at a later date." Following additional discovery and oral arguments on the constitutionality of the impact fee ordinance, the district court dismissed Home Builders's complaint for want of subject matter jurisdiction. It held that the 1986 impact fee ordinance constituted a "tax" for purposes of the Tax Injunction Act, and that the plaintiffs would be forced to seek relief in Mississippi state court, which could provide them with a plain, speedy, and
efficient remedy. Home Builders timely appealed from this final judgment.
III. Standard of Review
We review de novo the district court's grant of Madison's 12(b)(1) motion to dismiss for want of subject matter jurisdiction. 3 A motion under 12(b)(1) should be granted only if it appears certain that the plaintiff cannot prove any set of facts in support of his claim that would entitle him to relief. 4 "A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case." 5
The Tax Injunction Act provides:
The 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. 6
The act imposes drastic limitations on the federal judiciary's ability to meddle with a local concern as important and sensitive as the collection of taxes. 7 Embodied within the statute is "the duty of federal courts to withhold relief when a state legislature has provided an adequate scheme whereby a taxpayer may maintain a suit to challenge a state tax." 8 In short, the Tax Injunction Act is a "broad jurisdictional impediment to federal court interference with the administration of state tax systems." 9
We employ a bifurcated analysis to determine whether the Tax Injunction Act bars federal jurisdiction in a given case. First, because the act is implicated exclusively by matters of state and local taxation, we must decide whether the law in question imposes a tax or merely a regulatory fee. 10 Only if the law imposes a tax does the act preclude a federal district court from exercising jurisdiction. Second, even if the law imposes a tax for purposes of the Tax Injunction Act, a district court may decline to exercise jurisdiction only if the state court is equipped to furnish the plaintiffs with a plain, speedy, and efficient remedy. 11 That is, the act does not divest district courts of jurisdiction if state court remedies are inadequate.
Tax v. Fee
Our initial inquiry, then, is whether Madison's impact fee ordinance qualifies as a tax for purposes of the Tax Injunction Act. Home Builders, of course, urges that the ordinance imposes a fee, in which event the act would not operate as a jurisdictional bar. For its part, Madison contends that the ordinance fits squarely within the meaning of a tax as contemplated by the act. For the
reasons that follow, we hold that Madison's impact fee ordinance qualifies as a tax rather than a fee for purposes of the Tax Injunction Act. 12
Distinguishing a tax from a fee often is a difficult task. Indeed, "the line between a 'tax' and a 'fee' can be a blurry one." 13 Workable distinctions emerge from the relevant case law, however: the classic tax sustains the essential flow of revenue to the government, while the classic fee is linked to some regulatory scheme. 14 The classic tax is imposed by a state or municipal legislature, while the classic fee is imposed by an agency upon those it regulates. 15 The classic tax is designed...
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