Brittingham 62, LLC v. Somerset Cnty. Sanitary Dist., Inc.
| Decision Date | 31 January 2013 |
| Docket Number | Civil Action No. GLR 12-3104 |
| Parties | BRITTINGHAM 62, LLC, Plaintiff, v. SOMERSET COUNTY SANITARY DISTRICT, INC., Defendant. |
| Court | U.S. District Court — District of Maryland |
THIS MATTER is before the Court on Plaintiff Brittingham 62, LLC's ("Brittingham") Motion to Remand this action to the Circuit Court for Somerset County, Maryland. (ECF No. 10). Brittingham alleges that Defendant Somerset County Sanitary District, Inc.'s ("District") removal of this action is improper because this Court lacks jurisdiction under the Tax Injunction Act ("TIA"), 28 U.S.C. § 1341 (2012).
The two primary issues before the Court are: (1) whether the charges imposed by the District constitute a tax for the purposes of barring federal jurisdiction under the TIA; and (2) whether Maryland law affords Brittingham a "plain, speedy and efficient" remedy as required by the TIA. The issues have been fully briefed and no hearing is necessary. See Local Rule 105.6 (D.Md. 2011). For the reasons that follow, Brittingham's Motion to Remand will be granted.
The District is a public corporation incorporated in 1959 by County Commissioners for Somerset County. The District is authorized, pursuant to Md. Code Ann., Envir. § 9-600 (West 2012), to acquire, construct, operate, and maintain water and sewer systems in Somerset County. The statute permits the District to finance these projects by borrowing funds and imposing front-foot benefit assessments against benefitted properties to repay the incurred debt.
Brittingham is a Maryland limited liability company that has owned property in the Princess Anne/Westover subdistrict since 2006, and receives water and sewage services from the District. The corporate limits of Princess Anne and the University of Maryland Eastern Shore ("UMES") are also located in this subdistrict.
In 2004, after repeated sewage overflows, concerns arose regarding the District's capacity to serve existing and future users in the Princess Anne area due to inadequate sewage facilities. To remedy these issues and accommodate planned development for land situated along UMES Boulevard, the District implemented a public infrastructure improvement that involved laying new pipes ("force main"), constructing new pump stations,and expanding existing systems (collectively referred to as the "Bypass Project").
The District secured a $3.2 million loan from the United States Department of Agriculture ("USDA") to fund the Bypass Project, which was completed in 2007. From 2006 until the completion of the Bypass Project, the District was unable to provide services to new developments in Princess Anne. Properties desiring water and sewage services were placed on an allocation (waiting) list. Since project completion, the general public and affected property owners have experienced several benefits, including the elimination of sewage overflows and backups, an increase in overall capacity of the Princess Anne sewage system, and the installation of 2,600 feet of new water main. Although not included in the original plans for the Bypass Project, the District also used part of the USDA loan to execute an emergency replacement of its Crisfield Lane well.
Brittingham applied for service in 2007, which the District later approved. In 2008, the District placed Brittingham in the allocation queue, but, to date, the District has not installed a connector from the new bypass force main to Brittingham's property. From January 2008 until present, the District has imposed annual, front-foot benefit assessments on eight to ten privately owned properties, including Brittingham's, which the District determined to have specially benefitted from the BypassProject. The revenue from the assessments is exclusively used by the District to pay off the USDA loan.
In 2008, 2009, and 2010, the District charged, and Brittingham paid, $51,420.00, $49,679.95, and $50,379.33, plus interest, respectively in front-foot benefit assessments. In 2011 and 2012, the District charged Brittingham additional assessments to maintain its placement in the allocation, but Brittingham refused to pay. In May 2012, Brittingham requested a refund of the 2009 and 2010 assessment payments, and cancellation of the 2011 and 2012 unpaid assessments, both of which the District denied.
On September 19, 2012, Brittingham filed a Petition of Appeal in the Maryland Tax Court ("Tax Court") for a refund of the 2009 and 2010 assessment payments. (See Def.'s Mot. to Dismiss or Alt. Summ. J. ["Def.'s Mot. to Dismiss"] Ex. 6 at 1, ECF No. 5-7). The same day, Brittingham also filed a Complaint for Declaratory Judgment, Injunctive and Other Relief in the Circuit Court for Somerset County challenging the unpaid and future benefit assessments, and requesting reimbursement for the 2009 and 2010 assessment payments. (ECF No. 2). The District removed the case to this Court on October 22, 2012 (ECF No. 1), and subsequently filed a Motion to Dismiss or, in the Alternative, for Summary Judgment on October 26, 2012. (ECF No. 5). Brittingham filed the pending Motion to Remand on November 15, 2012.
Federal courts have removal jurisdiction over state court actions "of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a) (2012). A district court has original jurisdiction over civil claims arising under federal law, 28 U.S.C. § 1331 (2012); over civil actions where the amount in controversy exceeds $75,000, exclusive of interests and costs, and there is complete diversity of citizenship, 28 U.S.C. § 1332(a) (2012); and over actions where the "putative state law claim has been totally subsumed by federal law." Lontz v. Tharp, 413 F.3d 435, 439-40 (4th Cir. 2005). The removing party has the burden of proving the existence of federal jurisdiction. See Strawn v. AT & T Mobility LLC, 530 F.3d 293, 296 (4th Cir. 2008).
When the plaintiff challenges the propriety of removal, the defendant bears the burden of proving that removal was proper. See Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994). On a motion to remand, the court must "strictly construe the removal statute and resolve all doubts in favor of remanding the case to state court." Richardson v. Phillip Morris, Inc., 950 F.Supp. 700, 702 (D.Md. 1997) (citing Marshall v. Manville Sales Corp., 6 F.3d 229, 232 (4th Cir. 1993)). This standard reflects the reluctance of federal courts "to interfere with matters properly before a state court." Id. at 701.
Nevertheless, the federal remand statute provides that "[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise . . . ." 28 U.S.C. § 1447(d) (2012). In other words, "a district court should be cautious in denying defendants access to a federal forum because remand orders are generally unreviewable." Semtek Int'l, Inc. v. Lockheed Martin Corp., 988 F.Supp. 913, 914-15 (D.Md. 1997); see also In re Lowe, 102 F.3d 731, 736 (4th Cir. 1996) (). If an order to remand is entered, all remaining pending motions are moot. In re Lowe, 102 F.3d at 736.
Brittingham avers that this matter should be remanded to the Circuit Court for Somerset County because the Tax Injunction Act strips this Court of jurisdiction. The Court agrees. As a result, Brittingham's Motion to Remand will be granted.
The TIA bars federal jurisdiction in cases involving state or local taxes when a plain, speedy, and efficient remedy exists at the state court level. See 28 U.S.C. § 1341 (2012).2 The TIA's "broad restriction on federal court jurisdiction over state and local tax matters reflects the importance of the taxing power tothe operation of state governments as well as the desire of the Congress to restrain federal courts from unduly interfering with state revenue collection." Collins Holding Corp. v. Jasper Cnty., S.C., 123 F.3d 797, 799 (4th Cir. 1997) (citations omitted). Moreover, the TIA "has been interpreted broadly to bar suits for declaratory and injunctive relief . . . and suits for refunds or monetary relief[.]" Id. at 799 n.2 (citations omitted). The TIA "is a jurisdictional bar not subject to waiver." Antosh v. City of Coll. Park, 341 F.Supp.2d 565, 568 (D.Md. 2004).
The application of the TIA in this case hinges upon a twofold inquiry: (1) whether the front-foot benefit assessments constitute a tax; and (2) whether Maryland state courts afford Brittingham an adequate judicial remedy. For the reasons fully discussed infra, the Court finds that the District's benefit assessments constitute a tax for purposes of the TIA, and that Maryland state courts afford Brittingham a process to pursue judicial review of its claims.
Under the standard elaborated by the United States Court of Appeals for the Fourth Circuit in Valero Terrestrial Corp. v. Caffrey, 205 F.3d 130, 134 (4th Cir. 2000), the benefit assessments levied by the District constitute a tax because they are imposed as a legislative function, with an underlying purposeof financing the construction of an infrastructure that benefits the general public of Princess Anne.
The nebulous line between tax and fee is determined by federal law. Folio v. City of Clarksburg, W. Va., 134 F.3d 1211, 1217 (4th Cir. 1998). A classic tax describes a charge imposed by a legislature on a broad population that is spent to benefit the general public. San Juan Cellular Tel. Co. v. Public Serv. Comm'n of P.R., 967 F.2d 683, 685 (1st Cir. 1992). A classic fee is conferred by an administrative agency upon a specific group subject to the agency's regulation to offset administrative costs associated with the regulatory activities. Id.; see also Valero, 205 F.3d at 134. Courts have recognized that charges rarely fall neatly into either the fee or tax...
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