Adams v. State
| Decision Date | 27 November 1985 |
| Docket Number | Civ. No. F 85-279. |
| Citation | 622 F. Supp. 1478 |
| Parties | Larry J. ADAMS; Lena M. Adams; Walter L. Vandybogurt; American Truck Stops of Indiana, Inc.; and Tri-State Oasis, Inc., Plaintiffs, v. STATE of Indiana, Indiana Department of Revenue; M.F. Renner, Commissioner of Indiana Department of Revenue; James W. Poe, Administrator, Indiana Department of Revenue, Motor Fuel Tax Division; and Jack Hanna, Defendants. |
| Court | U.S. District Court — Northern District of Indiana |
Donald C. Swanson, Jr. and Stanley L. Campbell, Swanson & Campbell, Fort Wayne, Ind., for plaintiffs.
David A. Redmond and James R. Green, Deputy Attys. Gen., Indianapolis, Ind., for defendants.
This matter is before the court on the defendants' motion to dismiss. The parties have fully briefed the issues raised by the motion. For the following reasons, the motion to dismiss will be granted.
This cause arises out of the assessment of a Special Motor Fuel Tax by the defendant Indiana Department of Revenue pursuant to the provisions of I.C. 6-6-2.1-101, et seq. In February, 1985, the Motor Fuel Tax Division of that Department assessed taxes in the amount of $309,317.63 against American Truck Stops of Indiana, Inc., a corporation whose shareholders were plaintiffs Larry Adams, Lena Adams, and Walter Vandybogurt, as well as assessing $96,908.38 against Larry Adams. The plaintiffs have brought this action under 42 U.S.C. § 1983, seeking a permanent injunction against the collection of the assessment, and damages from defendant Jack Hanna, an investigator for the Motor Fuel Tax Division, as well as a pendent state claim for interference with business relationships against Hanna.
In deciding a motion to dismiss for failure to state a claim, this court must take the well pleaded factual allegations of plaintiff's complaint as true. Ashbrook v. Hoffman, 617 F.2d 474 (7th Cir.1980). A complaint should be dismissed for failure to state a claim only if it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). However, Conley has never been interpreted literally. Sutliff, Inc. v. Donovan Companies, 727 F.2d 648, 654 (7th Cir.1984). The test is whether a complaint contains either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory. Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir.1984). This court must consider the complaint in the light most favorable to the plaintiff and must resolve every reasonable doubt in favor of the claimant. Henry C. Beck Co. v. Fort Wayne Structural Steel, 701 F.2d 1221 (7th Cir.1983). "The heavy costs of modern federal litigation ... counsel against launching the parties into pretrial discovery if there is no reasonable prospect that the plaintiff can make out a cause of action from the events narrated in the complaint." Sutliff, 727 F.2d at 654.
Viewing the complaint in light of these principles, the relevant facts appear to be as follows. Plaintiffs Larry and Lena Adams and Walter Vandybogurt were shareholders and officers of American Truck Stops of Indiana, Inc. ("American") and Tri-State Oasis, Inc. ("Tri-State"). American operated a truck stop in Pierceton, Indiana, selling fuel, gasoline and other services, while Tri-State operated a truck stop/restaurant in Tekonsha, Michigan.
On November 28, 1984, Jack Hanna appeared at the American truck stop in Pierceton and told Larry Adams and Vandybogurt that there was $5,000.00 in special fuel tax owing and that he was there to lock and seal the pumps of the truck stop. Adams and Vandybogurt offered to pay the tax immediately, but Hanna refused to accept the payment and proceeded to lock the pumps. The pumps stayed locked for four days, and American lost business and good will as a result, and was eventually forced to permanently close and cease its business activities.
On February 3, 1985, the defendants State of Indiana, Indiana Department of Revenue, M.F. Renner, as Commissioner of the Department of Revenue, and James W. Poe, as Administrator of the Department of Revenue, issued a notice of tax due under the special motor fuel tax statutes to American in the amount of $309,317.63, and to Larry Adams in the amount of $96,908.38. The amount of the assessments was based on a special fuel tax investigation conducted by Hanna. On March 25, 1985, counsel for the plaintiffs notified the state that the plaintiffs were protesting the assessments because the fuel stored at the American truck stop in Pierceton had been transferred to Tri-State's truck stop in Michigan, which the plaintiffs contend makes the fuel exempt from taxation under I.C. 6-6-2.1-301.
An administrative hearing was scheduled for May 8, 1985 at 2:00 p.m. in Indianapolis, Indiana. With knowledge that the plaintiffs located themselves at the Tri-State Michigan location, the defendants nevertheless did not send notice of the hearing to the plaintiffs. In fact, the plaintiffs found out about the hearing only because Hanna called the Tri-State truck stop on the afternoon of the 8th. When Adams' counsel called down to Indianapolis, the Motor Fuel Tax Division hearing officer, Madeline Chandler, confirmed that no notice had been sent to the Tri-State address or to counsel, but had been sent to the Pierceton address. Chandler advised counsel that no meaningful continuance of the hearing would be granted, and that the plaintiffs' protest would be denied for failure to appear at the hearing. This denial was memorialized in a letter issued May 16, 1985 by the Motor Fuel Tax Division.
The plaintiffs contend that the assessments at issue here were based on false information contained in Hanna's investigation report. Hanna knew the information was false, and the investigation and assessments were part of a pattern of harassing the plaintiffs to pressure them into aiding Hanna and Dennis S. Guillaume, an Indiana State Police officer, in a criminal investigation. Hanna's harassment occurred not only at the American truck stop, but also at the Tri-State location in Michigan and at the Fort Wayne offices of Ortho-Manor, Inc., an orthopedic supply store run by Larry and Lena Adams. As a result of Hanna's actions, American has ceased to do business, and Tri-State and the Adamses have been forced into involuntary bankruptcy.
Count I of the complaint alleges that the assessment of the taxes and the denial of plaintiffs' protest deprived the plaintiffs of due process under the fourteenth amendment. Count I seeks a permanent injunction against the State, the Department of Revenue, and their agents preventing the enforcement or collection of any monies or properties pursuant to assessments for special fuel taxes. Count II alleges that Hanna, acting under color of state law, violated plaintiffs' fourteenth amendment rights and seeks damages for the losses suffered as a result of Hanna's action. Count III seeks damages from Hanna under the state law theory of interference with business relationships.
The defendants' motion to dismiss Count I offers three grounds for dismissal: (1) the Anti-Injunction Act, 28 U.S.C. § 1341, prevents the issuance of an injunction to restrain the collection of a tax; (2) sovereign immunity prevents suit against the state or its agencies and agents; and (3) notions of comity. Defendants urge dismissal of Count II on principles of comity and because the plaintiffs fail to state a claim under 42 U.S.C. § 1983, given the principles of Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981). Finally defendants argue that Count III should be dismissed for lack of pendent jurisdiction when the main federal claims are dismissed.
Defendants seek dismissal of Count I, which seeks a permanent injunction against the assessment of special fuel taxes, on the basis of the Anti-Injunction Act, 28 U.S.C. § 1341 (), which provides:
The district court 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.
The Act clearly prohibits this court from issuing an injunction in this case if a "plain, speedy, and efficient remedy" exists in the Indiana courts. Rosewell v. LaSalle National Bank, 450 U.S. 503, 512, 101 S.Ct. 1221, 1228, 67 L.Ed.2d 464 (1981); Fromm v. Rosewell, 771 F.2d 1089, 1092 (7th Cir. 1985).
As plaintiffs readily admit, there is a remedy under Indiana law. I.C. 6-6-2.1-1105 provides:
The real issue here is whether the remedy is "plain, speedy and efficient."
The Supreme Court has made it clear that the principal purpose of the Anti-Injunction Act was "to limit drastically federal district court jurisdiction to interfere with so important a local concern as the collection of taxes." California v. Grace Brethren Church, 457 U.S. 393, 408, 102 S.Ct. 2498, 2508, 73 L.Ed.2d 93 (1982); Rosewell, 450 U.S. at 522, 101 S.Ct. at 1233. The Act embodied Congress' recognition that "the autonomy and fiscal stability of the States survive best when state tax systems are not subject to scrutiny in federal courts." Fair Assessment in Real Estate Ass'n v. McNary, 454 U.S. 100, 102-03, 102 S.Ct. 177, 179, 70 L.Ed.2d 271 (1981). Consistent...
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