Brusznicki v. Prince George's Cnty.
| Decision Date | 02 August 2022 |
| Docket Number | 21-1621 |
| Citation | 42 F.4th 413 |
| Parties | Chris BRUSZNICKI; Thornton Mellon, LLC ; Geoffrey Polk, Plaintiffs - Appellants, and Paradise Point, LLC, Plaintiff, v. PRINCE GEORGE'S COUNTY; Brian E. Frosh, Attorney General for the State of Maryland, Defendants – Appellees, and Stephen J. McGibbon, Acting Director Collector of Taxes, Defendant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: N. Tucker Meneely, COUNCIL, BARADEL, KOSMERL & NOLAN, P.A., Annapolis, Maryland, for Appellants. Justin E. Fine, OFFICE OF THE ATTORNEY GENERAL OF MARYLAND, Baltimore, Maryland, for Appellees. ON BRIEF: Brian T. Gallagher, COUNCIL, BARADEL, KOSMERL & NOLAN, P.A., Annapolis, Maryland, for Appellants. Brian E. Frosh, Attorney General, Adam D. Snyder, Assistant Attorney General, OFFICE OF THE ATTORNEY GENERAL OF MARYLAND, Baltimore, Maryland, for Appellees.
Before AGEE and RICHARDSON, Circuit Judges, and FLOYD, Senior Circuit Judge.
Reversed and remanded with instructions by published opinion. Senior Judge Floyd wrote the opinion in which Judge Agee and Judge Richardson joined.
Plaintiffs Geoffrey Polk, Chris Brusznicki, and Thornton Mellon, LLC are "in the business of purchasing tax-lien certificates." Pls.' Opening Br. 2. They attend government auctions where they bid on tax-delinquent properties and, if successful, either take title to the properties or earn interest while the owners try to redeem them. A Maryland statute has made that endeavor difficult in Prince George's County. The problem: the statute directs the County to offer defaulted properties to a select class of people (comprising largely those living and holding government positions there) before listing the properties for regular public auction. Plaintiffs, who do not fit that limited class, claim the statute violates the Privileges and Immunities Clause of the U.S. Constitution. Because it tramples on fundamental rights to own property and pursue a chosen profession without advancing any substantial state interests, we agree and reverse the district court.
Like most States, Maryland considers unpaid real-property taxes to constitute a lien against the property and permits local authorities to auction to the public the right to enforce those liens as a way of recovering the monies owed. Unlike most States, however, Maryland requires Prince George's County to first hold a "limited auction" open only to several enumerated categories of people. Md. Code Ann., Tax-Prop. § 14-817(d)(3). In 2017, when this Tax-Property statute was enacted, those categories included: Prince George's residents, persons employed by the County government, persons employed by a municipal government in the County, veterans (without further qualification), and federal employees (also without qualification). Id. To prevent an end-run around these restrictions, Maryland also prohibits successful bidders from transferring their titles. Id. § 14-821(b). Remaining properties then proceed to a general auction, where anyone can bid. And unlike the limited-auction winners, their general-auction counterparts may freely assign their interests. Id. § 14-821(a).
Aside from this limited auction, Prince George's tax sales are nothing out of the ordinary. The auction winner receives a lien certificate. For occupied dwellings, owners then have six months to redeem their properties before the lien-certificate holder may legally foreclose and obtain a deed. But to succeed, owners must pay several different fees and penalties, including a special redemption rate assessed by each county. Prince George's sets its rate at 20%, making its tax-sales auction an attractive "investment opportunity." See Att'y Gen.'s Resp. Br. 3–4. In that way, many bidders use their tax-lien certificates not to secure ownership over the properties but to earn the interest the owners will pay. See id. This process runs similarly for "vacant" lots and properties "unfit for habitation," except that lien-certificate holders may—though they do not have to—initiate foreclosure proceedings on such properties immediately, without waiting the six months. Md. Code Ann., Tax-Prop. § 14-833(h).
Plaintiffs Polk, Brusznicki, and Thornton Mellon, LLC allege the limited-auction regime has pinioned their property and business opportunities. Polk, who resides in Illinois, claims the County has repeatedly refused him participation in the limited auctions, depriving him of an opportunity to bid on properties already bought up at those auctions and forcing him to pay more for left-over properties than the privileged classes had paid at the artificially bridled limited auctions. And Brusznicki, though he has been able to participate in the limited auctions under the veteran exception despite also living in Illinois, challenges § 14-821(b)'s provision banning him from assigning his lien certificates to Thornton Mellon.
Believing these burdens violate the Privileges and Immunities Clause, Plaintiffs brought this action against Prince George's in Maryland's state court. The County removed to federal court, and Plaintiffs amended their complaint to add Maryland's Attorney General. The Attorney General and Plaintiffs then cross-moved for summary judgment, with the County taking no position on the statute's constitutionality. Plaintiffs sought declaratory and injunctive relief preventing the Attorney General and the County from enforcing the statute. The Attorney General requested the court to uphold the statute's constitutionality in full. And both sides accepted the basic facts giving rise to the suit.
The district court granted each motion in part. It held the Privileges and Immunities Clause "clear[ly]" applied because the statute curtailed "the ability of nonresidents to engage in the fundamental right of acquiring property within the state." Paradise Point, LLC v. Prince George's Cnty. , 540 F. Supp. 3d 524, 530 (D. Md. 2021). But it also recognized a "compelling" County interest in "community-revitalization": improving neighborhoods, promoting homeownership, and reducing the blight vacant and abandoned properties cause. Id. It thus accepted that certain protectionist measures may be appropriate in principle, so long as "the discrimination practiced against nonresidents bears a substantially close relationship to the reason proffered by the State." Id. at 531. But the two provisions permitting veterans and federal employees to bid in the auction no matter where they live or work troubled the court. It believed them too far removed from any legitimate state interest "because those classes purportedly do not share the same incentives to pursue community revitalization goals." Id. at 531. So the court severed those two provisions, but otherwise left the Tax-Property statute, § 14-817(d), intact. Id. at 533.1
Ten days after the district court issued its judgment, Maryland reinserted the veteran and federal-employee provisions, albeit capping them only to veterans and federal employees who work in the County. Md. Code Ann., Tax-Prop. § 14-817(d)(3). It also narrowed the scope of the limited auction to vacant and uninhabitable properties, opening all other properties to general-public bidding. Id. § 14-817(d)(2).
Plaintiffs now appeal the district court's summary judgment. We review de novo, "applying the same legal standards as the district court and viewing all facts in the light most favorable to the nonmoving party." W.C. English, Inc. v. Rummel, Klepper & Kahl, LLP , 934 F.3d 398, 402–03 (4th Cir. 2019) (citation omitted). And we consider the judgment "in light of the [ ] statute as it now stands, not as it once did." Hall v. Beals , 396 U.S. 45, 48, 90 S.Ct. 200, 24 L.Ed.2d 214 (1969).
Before we can dive into the merits of Plaintiffs' Privileges and Immunities claim, we must address the Attorney General's argument that Maryland's amendments to the Tax-Property statute—limiting the auction to properties unfit for habitation and permitting only those veterans and federal employees who work in the County to participate—have mooted Plaintiffs' claims. The district court has not had an opportunity to rule on this argument because it entered its order before Maryland amended the statute. But mootness raises a question of law, Green v. City of Raleigh , 523 F.3d 293, 298 (4th Cir. 2008), and its resolution here is rather straightforward, so we see no need to remand.
In this Court, as in all others, an action becomes moot when it "los[es] its character as a present, live controversy of the kind that must exist if we are to avoid advisory opinions on abstract propositions of law."
Jordahl v. Democratic Party of Va. , 122 F.3d 192, 198 (4th Cir. 1997) (citation omitted). This inquiry applies to all changed circumstances—nothing about a statutory amendment per se moots a case. Instead, a legislative amendment will moot a challenge only when it "significantly alters the posture of th[e] case." U.S. Dep't of Treasury v. Galioto , 477 U.S. 556, 559, 106 S.Ct. 2683, 91 L.Ed.2d 459 (1986). But where, "as now written," a statute continues to abridge plaintiffs' rights, litigation may press on. United Bldg. & Constr. Trades Council of Camden Cnty. & Vicinity v. Mayor & Council of Camden , 465 U.S. 208, 214, 104 S.Ct. 1020, 79 L.Ed.2d 249 (1984) ; cf. Nat'l Treasury Emps. Union v. Von Raab , 489 U.S. 656, 661 n.1, 109 S.Ct. 1384, 103 L.Ed.2d 685 (1989) ().
Here, neither amendment destroyed the basis for Plaintiffs' claims. True, Plaintiffs now stand on the same footing as County residents with respect to well-maintained properties, but they remain disadvantaged when it comes to vacant, uninhabitable ones. The Attorney General paints that disadvantage as slight because "inhabited properties ... provide the greatest investment opportunities." Att'y Gen.'s Resp. Br. 15 n.3. But Plaintiffs never limited their...
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