Appling County v. Municipal Elec. Authority of Georgia, 79-1308

• Citation: 621 F.2d 1301
• Decision Date: 23 July 1980
• Docket Number: No. 79-1308,79-1308
• Parties: APPLING COUNTY et al., Plaintiffs-Appellants, v. MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1301

621 F.2d 1301

APPLING COUNTY et al., Plaintiffs-Appellants, v. MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA et al., Defendants-Appellees.

No. 79-1308.

United States Court of Appeals, Fifth Circuit.

July 23, 1980.

Durwood T. Pye, Pye, Groover & Dailey, Atlanta, Ga., Emmett P. Johnson, Baxley, Ga., for plaintiffs-appellants.

L. Clifford Adams, Jr., Atlanta, Ga., Thomas S. Gray, Jr., Savannah, Ga., Robert P. Edwards, Jr., James E. Joiner, Atlanta, Ga., for Municipal Electric Auth. of Ga.

Appeal from the United States District Court for the Southern District of Georgia.

Before GEE, FAY and RANDALL, Circuit Judges.

PER CURIAM:

On the basis of the order of the district court, a copy of which is appended hereto, the above cause is AFFIRMED.

APPENDIX

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF GEORGIA

BRUNSWICK DIVISION

APPLING COUNTY, * CIVIL ACTION

JAUNICE PRESLEY,

DAVID BURKE, * No. 278-66

BRICE BEECHER,

BEN WEAVER, *

NORMAN HOLLIS, and

JOHNNIE THORNTON, *

Plaintiffs, *

VS. *

MUNICIPAL ELECTRIC AUTHORITY *

OF GEORGIA and GEORGIA

POWER COMPANY *

Defendants *

ORDER

The above-styled action involves the collection of ad valorem taxes in Appling County, Georgia. Plaintiffs, the County, itself, and individual citizens and taxpayers of Appling County, seek to impose ad valorem taxes on that portion of the Edwin I. Hatch Nuclear Plant located in Appling County, which is owned by the Municipal Electric Authority of Georgia, hereinafter (MEAG). To this end, plaintiffs seek declaratory relief pursuant to 28 U.S.C. § 2201, alleging that MEAG's interest in Plant Hatch is in fact not tax-exempted "property" and that defendant, Georgia Power, should pay taxes on Plant Hatch in its entirety. Plaintiffs allege further that the defendants have in combination "misused" MEAG's statutory exemption from taxation and have thereby deprived plaintiffs of due process and equal protection of the law. Defendants are also said to have violated the contract impairment clause in Article I of the Constitution. Plaintiffs pray that the Court declare that the entirety of Plant Hatch is subject to taxation, that MEAG's 17.7% interest is not exempt from taxation, or alternatively that the 17.7% interest is not exempt from taxation for the payment of principal and interest on certain County bonds. The case is presently before the Court on defendants' motions to dismiss on various grounds.

The purpose of the Municipal Electric Authority of Georgia which was created by the Georgia Legislature, Ga. Code Ann. § 34B-401 et seq., is:

" . . . to acquire and construct, and operate and maintain or cause to be constructed, operated, and maintained electric generation and transmission facilities, and to take all other necessary or desirable action, in order to provide or make available an adequate, dependable, and economic supply of electric power and energy and related services for such of said political subdivisions of the State of Georgia as are hereinafter identified in section 34B-427, as may desire the same and, incidentally and so as to take advantage of economies of scale in the generation and transmission of electric power and energy, to other persons and entities."

Ga. Code Ann. § 34B-403. The property of the Authority is declared by statute to be public property and is statutorily exempted from taxation by the State or any of its political subdivisions, Ga. Code Ann. § 34B-406. Pursuant to Ga. Code Ann. §§ 34B-407, 34B-408 and 34B-427, MEAG purchased from Georgia Power a 17.7% undivided interest in the Hatch Nuclear Plant. MEAG supplies electrical power to 47 political subdivisions in Georgia, though not to Appling County.

Defendants move to dismiss on grounds, inter alia, that the Court lacks subject-matter jurisdiction of the action. Of course, the fact that the plaintiffs seek declaratory relief under 28 U.S.C. § 2201, does not absolve them of the necessity of bringing themselves within a jurisdictional statute. See 6A J. Moore, Federal Practice P 57.23 (2d ed. 1974); Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 70 S.Ct. 876, 94 L.Ed. 1194 (1950). Plaintiffs attempt to bring themselves within the Court's federal question jurisdiction under 28 U.S.C. § 1331, and they also allege subject-matter jurisdiction under 42 U.S.C. § 1983 and its jurisdictional counterpart, 28 U.S.C. § 1343.

I.

28 U.S.C. § 1341

Defendants argue that the Tax Injunction Act, 28 U.S.C. § 1341, deprives the Court of jurisdiction and requires dismissal of the complaint. The 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."

28 U.S.C. § 1341. While a suit seeking declaratory relief can fall within the scope of § 1341's prohibition, Coon v. Teasdale, 567 F.2d 820, 821 n.2 (8th Cir. 1977), under Fifth Circuit precedents, § 1341 is inapplicable to the present action because it seeks not to inhibit the collection of taxes, but to require the collection of additional taxes. See Hargrave v. McKinney, 413 F.2d 320 (5th Cir. 1969). See also Bland v. McHann, 463 F.2d 21, 26 n.21 (5th Cir. 1972), cert. denied 410 U.S. 966, 93 S.Ct. 1438, 35 L.Ed.2d 700 (1973); Battle v. Cherry, 339 F.Supp. 186 (N.D.Ga.1972).

Apart from 28 U.S.C. § 1341, a judicially created doctrine of abstention appertains to cases in federal court involving state tax administration. See, e.g., Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 63 S.Ct. 1070, 87 L.Ed. 1407 (1943). However, this judicial abstention doctrine has also been held inapplicable where the suit seeks to require additional taxes. Hargrave v. Kirk, 313 F.Supp. 944 (M.D. Fla. 1970) (three-judge court), reversed on other grounds sub nom., Askew v. Hargrave, 401 U.S. 476, 91 S.Ct. 856, 28 L.Ed.2d 196 (1971). Accord Cornelius v. Benevolent Protective Order of Elks, 382 F.Supp. 1182 (D. Conn. 1974).

II.

28 U.S.C. § 1331

Defendants cite L & N R.R. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed.2d 126 (1908), for the proposition that a federal district court has subject-matter jurisdiction under § 1331 only when plaintiff's statement of his own cause of action shows that it is based on federal law. See also Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 94 S.Ct. 1002, 39 L.Ed.2d 209 (1974). Defendants argue that there is no federal question jurisdiction under § 1331 because the plaintiffs' Constitutional claims are alleged only in anticipation of a defense which the defendants will assert, i.e., MEAG's statutory exemption from taxation. The allegations that Georgia Power did not really transfer any taxable "property" to MEAG when it conveyed the 17.7% interest in Plant Hatch, and that the defendants have "misused" MEAG's statutory tax exemption are clearly based on state law. However, plaintiffs' Constitutional claims cannot be characterized as merely anticipating the defense of MEAG's statutory exemption. Plaintiffs seek to impose ad valorem taxes on Plant Hatch in its entirety, alleging that under the status quo, they are being deprived of their constitutional rights of due process and equal protection. Compare Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946).

There remains, however, the question of whether the Constitutional claims are so insubstantial as to defeat jurisdiction. Compare Hagans v. Lavine, 415 U.S. 528, 538-539, 94 S.Ct. 1372, 1380, 39 L.Ed.2d 577 (1974). The Court concludes that the question must be answered in the affirmative and that plaintiffs' Constitutional claims can fairly be characterized as insubstantial. From plaintiffs' complicated and lengthy pleadings, their Constitutional claims can be distilled to the following:

1. The fact that the County cannot tax the 17.7% of Plant Hatch which was conveyed to MEAG, coupled with the fact that MEAG's share of the electric power generated at Plant Hatch is transmitted to political subdivisions other than Appling County deprive plaintiffs of equal protection or due process, or both. (Under Ga. Code Ann. § 34B-427, MEAG is authorized to contract to provide an electric power supply only with those political subdivisions of the state which " . . . on the date this Chapter becomes law own and operate an electric distribution system. Appling County is not among those political subdivisions.) ¹

2. The plaintiffs claim that their inability to tax Plant Hatch in its entirety constitutes a violation of the contract impairment clause because the County must pay the principal and interest on certain outstanding bonds from ad valorem proceeds, previously pledged to bond retirement.

The insubstantiality of plaintiffs' Constitutional claims is evident from well established Supreme Court precedents:

"This Court has repeatedly held that inequalities which result from a singling out of one particular class for taxation or exemption infringe no constitutional limitation.

"A legislature is not bound to tax every member of a class or none. It may make distinctions of degree having a rational basis, and when subject to judicial scrutiny they must be presumed to rest on that basis if there is any conceivable state of facts which would support it."

Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 509, 57 S.Ct. 868, 872, 81 L.Ed. 1245 (1937). The Supreme Court expounded on this principle in the recent case of Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 359-360, 93 S.Ct. 1001, 1004, 35 L.Ed.2d 351 (1973), a case involving an Illinois tax scheme which imposed a personal property tax on corporations, but not on individuals:

"The Equal Protection Clause does not mean that a State may not draw lines that treat one class of individuals or entities differently from the others. The test is whether the difference in treatment is an invidious discrimination. Harper v. Virginia Board of Elections, 383 U.S. 663, 666, 86 S.Ct. 1079, 1081, 16 L.Ed.2d...