District of Columbia v. Green

• Decision Date: 09 October 1973
• Docket Number: No. 7539.,7539.
• Parties: DISTRICT OF COLUMBIA, a municipal corporation, et al., Appellants, v. Clarzell GREEN et al., Appellees.
• Court: D.C. Court of Appeals

310 A.2d 848

DISTRICT OF COLUMBIA, a municipal corporation, et al., Appellants, v. Clarzell GREEN et al., Appellees.

No. 7539.

District of Columbia Court of Appeals.

Argued September 7, 1973.

Decided October 9, 1973.

COPYRIGHT MATERIAL OMITTED

Louis P. Robbins, Asst. Corp. Counsel, Washington, D.C., with whom C. Francis Murphy, Corp. Counsel, and Henry E. Wixon, Robert E. McCally, Richard W. Barton, David P. Sutton, Kenneth A. Pels and Richard L. Aguglia, Asst. Corp. Counsels, Washington, D.C., were on the brief, for appellants.

Gilbert Hahn, Jr., Washington, D.C., with whom Jack C. Sando, Washington, D.C., was on the brief, for appellees.

Philip W. Amram, Daniel G. Grove, Washington, D.C., and Steven L. Engelberg also entered appearances for appellees.

Before REILLY, Chief Judge, and KELLY and NEBEKER, Associate Judges.

KELLY, Associate Judge:

This appeal is from an order entered in the Superior Court, Tax Division, enjoining appellants from using, for purposes of taxation of single-family residential properties within the District of Columbia, unequal levels of assessment of estimated market value in determining the assessment, valuation or equalization of such properties, and from assessing such properties at a level of assessment other than 55% of estimated market value unless and until an equal level of assessment is established by the District after full compliance with the provisions of the District of Columbia Administrative Procedure Act (DCAPA).¹ The issues outlined by appellants for review are (1) whether the trial court erred in holding temporarily unequal single-family property levels of assessment (debasement factors)² of 55% and 60% to be unconstitutionally discriminatory when such temporary inequality resulted from a citywide cyclical reassessment work program designed to ultimately equalize all single-family property assessments with the multi-family and commercial properties debased at 65%; (2) whether the trial court's holding compels an unconstitutional discrimination against multi-family and commercial properties and 20% of the single-family properties in the District of Columbia; (3) whether the development of a cyclical assessment program designed to bring certain properties into compliance with constitutional and statutory mandates for equalization is "rulemaking" within the meaning of the DCAPA, and (4) whether the failure of some appellees to exhaust their administrative remedies and of others to pursue their statutory legal remedies precluded the trial court from granting injunctive relief. Appellees are in substantial agreement with the issues appellants present for review, demurring only to the suggestion that any question of a constitutionally prohibited discrimination against owners of properties in categories other than single-family properties is embraced within or even relevant to this appeal.

I

In brief explanation of the essential background to this appeal, there are three components of the mathematical process used to determine the dollar amount of tax due the District from an individual owner of real property each year; namely, the market value of the property, the debasement factor (level of assessment) to be applied to that value to determine the assessment (assessed value), and the tax rate. Market value (also referred to as estimated market value) is the fair market value of a particular property as determined from time to time by District assessors. The debasement factor is the percentage of market value upon which the tax will be levied. The tax rate is expressed in terms of dollars per hundred and is currently $3.32 per each $100 of an individual property's assessed value.

The assessment for an individual taxpayer is determined by multiplying the market value of the property by the debasement factor or level of assessment.³ The tax rate applied to the assessed value of the property is set by the City Council after notice published in the District of Columbia Register and, like the level of assessment, is fixed. The third component of the above equation, market value, is a variable with each individual property having a unique estimated value. Upon receipt of a tax bill, an aggrieved taxpayer may complain of an alleged unfair assessment to the Board of Equalization and Review (Board)⁴ and, beyond that, appeal to the Tax Division of the Superior Court.⁵

For several years immediately prior to calendar year 1969, if not before, all single-family residential properties in this city had a debasement factor of 55% and all multi-family residential, commercial and industrial real property was assessed at 65% of estimated market value. Thereafter, in a planned cyclical reassessment program, conceived and orally implemented by the Director of Finance and Revenue, the level of assessment for approximately 33,000 single-family residential properties was changed from 55% to 60% for fiscal year 1973, and, in preparing the tax rolls for fiscal year 1974, an additional 44,485 single-family properties were debased at 60%.⁶ The level of assessment of nearly 19,000 single-family residential properties remained at 55%.

Of the 44,485 taxpayers who at the end of 1972 received notices of assessments for fiscal year 1974, only 1,044 appealed, three of whom somehow ascertained the existence of, and raised as an issue, the increased level of assessment of their properties. Of the eleven named petitioners below (appellees), five unsuccessfully complained to the Board of Equalization and Review of alleged unfair assessments; six did not so complain. This class action was brought by petitioners on behalf of themselves and others so situated to enjoin the respondents (appellants) from applying the 60% debasement factor against their properties unless and until the same level of assessment was applied to all single-family residential properties within the District after compliance by the District with the pertinent provisions of the DCAPA. After a lengthy trial the court granted appellees the relief sought, accompanying its order with a comprehensive and learned memorandum opinion with which we are in full accord.⁷

The critical factors upon which we focus in our decision are (1) that the District's cyclical reassessment program was undertaken in a manner which resulted in unequal levels of assessment within a single class of assessed property, and (2) that no notice was given to District of Columbia single-family residential property owners that the level of assessment of their properties was in the process of change.

II

Relying upon D.C.Code 1967, § 47-709, appellants challenge the jurisdiction of the trial court to determine the claims of the six appellees who failed to complain of their increased assessments to the Board, alleging a failure to exhaust their administrative remedies;⁸ assert that the appellees who did complain to the Board are barred from suit by language in D.C.Code 1972 Supp., §§ 47-2403-2405 specifying that the court may not entertain a taxpayer's petition until after October 1, and after payment of the tax in full, and claim that the trial court erred in issuing an injunction in the face of D.C.Code 1967, § 47-2410 which provides that

No suit shall be filed to enjoin the assessment or collection by the District of Columbia or any of its officers, agents, or employees of any tax.

These jurisdictional points are not pressed with vigor here, each of the parties preferring a decision on the merits. Consequently, we simply point out that appellants' latter argument would be readily accepted except that the trial court found the facts of this case to be so exceptional and extraordinary as to merit equitable relief and, as the Court said in Miller v. Standard Nut Margarine Co., 284 U.S. 498, 509, 52 S.Ct. 260, 263, 76 L.Ed. 422 (1932):

[W]here complainant shows that in addition to the illegality of an exaction in the guise of a tax there exist special and extraordinary circumstances sufficient to bring the case within some acknowledged head of equity jurisprudence, a suit may be maintained to enjoin the collector. . . . [Citations omitted.]⁹

Additionally, the trial court found that since the six named petitioners (appellees) who bypassed the Board could not have known of the changed level of assessment until it was reluctantly made public in this lawsuit in June of 1973, they were unable to pursue the administrative remedy created by statute prior to cutoff date of April 1, 1973.¹⁰ It also found, in effect, that under the extraordinary circumstances of this case, outlined at length in its memorandum opinion and not repeated here, the petitioners who did not appeal to the Board were in reality afforded no effective administrative remedy. Moreover, the court saw no reason to require the parties who in good faith sought administrative review to wait until October 1 to apply for relief, after payment of tax, when those bypassing the useless administrative procedure were permitted to proceed, stating that to accept such an argument "would, in effect, add yet another dimension of inequity to a situation already surrounded by unfairness, secrecy and lack of candor."¹¹ The evidence of record supports the findings of the trial court and, as a consequence, it was not error to entertain the petition for injunction. As the Circuit Court said in Tumulty v. District of Columbia, 69 App.D.C. 390, 399-400, 102 F.2d 254, 263-264 (1939):

We think it clear that all administrative remedies in matters of taxation must be exhausted before resort can be had to court action. Nelson v. First Nat. Bank, 8 Cir., 42 F.2d 30, but think it equally clear that when the assessment is void, the taxpayer may resort to equity for relief, without following statutory remedies. . . . [Emphasis supplied.]

III

Appellees successfully contended in the trial court that the fixing of a level of assessment for real property is rulemaking within the meaning of the District of Columbia Administrative...