Gillis, In re
| Decision Date | 05 January 1988 |
| Docket Number | No. 87-5078,87-5078 |
| Citation | 836 F.2d 1001 |
| Parties | In re Gary GILLIS, Secretary of Revenue of the State of Kentucky; Clayton Foster, Property Valuation Administrator of Hopkins County, Kentucky; Emogene Geary, Property Valuation Administrator of Ohio County, Kentucky; Robert McLearn, Property Valuation Administrator of Muhlenberg County, Kentucky; Jerry Blanton, Property Valuation Administrator of Harlan County, Kentucky; and H.E. Grace, Property Valuation Administrator of Bell County, Kentucky, Petitioners. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Douglas M. Dowell (argued), Ross T. Carter, James D. Brannen, Frankfort, Ky., Henry Hayden, Hayden and McKown, Hartford, Ky., for petitioners.
J. Richard Cohen (argued), Montgomery, Ala., Joe Childers, Lexington, Ky., for respondent.
Before JONES, WELLFORD and GUY, Circuit Judges.
Petitioner, Gary Gillis, along with the county property valuation administrators of the state of Kentucky, seeks a writ of mandamus requiring the district court to enter an order of dismissal in Nowak v. Foster, No. C84-0057-P (W.D.Ky.Sept. 5, 1985), for lack of subject matter jurisdiction. Petitioners are the named defendants in that case. Pursuant to our authority under the All Writs Statute, 28 U.S.C. Sec. 1651, and for the reasons stated below, the petition shall be granted and the writ shall issue.
On February 17, 1984, a complaint was filed with the United States District Court for the Western District of Kentucky. Plaintiffs alleged that they were citizens and taxpayers of the commonwealth of Kentucky and that their taxable property was "assessed at fair cash value, or its full agricultural or horticultural value, in accordance with law." Named as a defendant was Gary Gillis, Secretary of Revenue of the commonwealth of Kentucky. As Secretary of Revenue, Mr. Gillis is head of the Revenue Cabinet, which has some supervisory authority over property valuation administrators. Ky.Rev.Stat. Sec. 131.020. The other named defendants were property valuation administrators of six counties in Kentucky. These officers are responsible for assessing all taxable property within their counties. Ky.Rev.Stat. Secs. 132.420, 132.450.
The action was brought pursuant to 42 U.S.C. Sec. 1983. Plaintiffs complained that "[a]s a result of the acts and omissions of the defendants, the taxable property in [Kentucky] owned by coal, oil and gas interests [was] systematically assessed for taxation purposes at substantially less than its fair cash value." This property included "land, improvements to land, equipment and unextracted coal, oil and gas." Because their property was assessed at its full fair cash value, plaintiffs asserted that this alleged "systematic underassessment of property held by coal, oil and gas interests" violated their right to equal protection of law.
Additionally, plaintiffs requested certification of both a plaintiff class ("all citizens of the State of Kentucky who own taxable property in the state and whose property is assessed at fair cash value, or full agricultural or horticultural value, in accordance with law") and a defendant class ("all property valuation administrators of counties in which taxable property owned by coal, oil or gas interests is located"). Class certification was sought pursuant to Fed.R.Civ.P. 23(b)(2). On April 9, 1986, the court entered an order certifying both classes.
In their prayer for relief, plaintiffs asked that the court: (1) declare that the defendants' assessments of property owned by coal, oil, and gas interests violates plaintiffs' rights to equal protection of law; (2) enter a permanent injunction against the defendants and the defendant class requiring them to assess all real and personal property owned by coal, oil, and gas interests at fair cash value; and (3) award the plaintiffs reasonable costs and attorney fees.
On May 10, 1984, the defendants moved to dismiss the action on the grounds that (1) the court lacked subject matter jurisdiction of the complaint because of the Tax Injunction Act, 28 U.S.C. Sec. 1341 and the related principle of comity as enunciated in cases such as Fair Assessment in Real Estate Ass'n v. McNary, 454 U.S. 100, 102 S.Ct. 177, 70 L.Ed.2d 271 (1981); (2) the plaintiffs lacked standing to bring the action; and (3) the action was barred by the Eleventh Amendment to the United States Constitution. On September 11, 1985, the court entered its order holding that plaintiffs' action was not barred either by the Tax Injunction Act or the doctrine of comity because the complaint sought to "enhance rather than inhibit the assessment of taxes in Kentucky." Defendants moved the court to reconsider its decision on the motion to dismiss or to certify its order denying the motion for immediate appeal under 28 U.S.C. Sec. 1292(b) on November 14, 1986. On January 23, 1987, after the filing of the petition herein, the district court denied defendants' motion to reconsider or certify.
The petition for writ of mandamus was filed on January 22, 1987. Petitioners contend that the district court erred in failing to dismiss the civil action in question on the grounds that it was barred by the Tax Injunction Act and the principle of comity underlying and augmenting the Act. In addition, petitioners assert that the court erred in failing to dismiss on the ground that the plaintiffs' lack standing to seek adjudication of the claim asserted. 1
The Tax Injunction Act states simply that 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. Sec. 1341. The statute "has its roots in equity practice, in principles of federalism, and in recognition of the imperative need of a State to administer its own fiscal operations." Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503, 522, 101 S.Ct. 1221, 1234, 67 L.Ed.2d 464, reh'g denied, 451 U.S. 1011 (1981) (quoting Tully v. Griffin, Inc., 429 U.S. 68, 73, 97 S.Ct. 219, 222, 50 L.Ed.2d 227 (1976)). "This last consideration was the principal motivating force behind the Act: this legislation was first and foremost a vehicle to limit drastically federal district court jurisdiction to interfere with so important a local concern as the collection of taxes." Rosewell, 450 U.S. at 522, 101 S.Ct. at 1234 (citing 81 Cong.Rec. 1415 (1937) (remarks of Sen. Bone)).
The Supreme Court has long recognized the dangers inherent in disrupting the administration of state tax systems:
It is upon taxation that the several States chiefly rely to obtain the means to carry on their respective governments, and it is of the utmost importance to all of them that the modes adopted to enforce the tax levied should be interfered with as little as possible. Any delay in the proceedings of the officers, upon whom the duty is devolved of collecting the taxes, may derange the operations of government, and thereby cause serious detriment to the public.
Dows v. City of Chicago, 78 U.S. (11 Wall.) 108, 110, 20 L.Ed. 65 (1870).
The Act divests district courts not only of jurisdiction to issue an injunction enjoining state officials, but also of jurisdiction to take actions that "suspend or restrain" the assessment and collection of state taxes. California v. Grace Brethren Church, 457 U.S. 393, 408, 102 S.Ct. 2498, 2507, 73 L.Ed.2d 93 (1982). Moreover, the Act also prohibits a district court from issuing a declaratory judgment holding state tax laws unconstitutional. Id.
In arguing that the Tax Injunction Act did not bar their claim, respondents relied principally on Hargrave v. McKinney, 413 F.2d 320 (5th Cir.1969), and its progeny. Plaintiffs there challenged a state statute providing that any county imposing ad valorem property taxes for educational purposes above a certain rate would not be eligible to receive state funds to support its educational system. Because the plaintiffs' suit challenged the constitutionality of a state taxing statute, the district court held that it was barred by the Tax Injunction Act. The Fifth Circuit reversed, stating:
It is clear that this suit does not come within the literal language of Section 1341. It is not a suit to enjoin, restrain or suspend the collection of a tax, but to the contrary is a suit to require the collection of taxes which citizens of a county have voted to impose on freeholders in the county. Thus, we must resolve the narrow question of whether the policies which underlie Section 1341 operate so as to make that section a jurisdictional bar to the maintenance of this action.... In view of the legislative history of this section and the myriad of cases holding generally that Section 1341 should be applied so as to protect the integrity of the state treasury, we hold that this section does not, as a jurisdictional matter, bar plaintiffs from the federal courts.
413 F.2d at 326 (emphasis added). 2
Respondents again assert that because their claim would not suspend or restrain the collection of taxes, but instead seeks to enhance the collection of taxes, under Hargrave their case is not barred by the Tax Injunction Act. 3 Respondents acknowledge that in Grace Brethren, the Court held that district courts are barred from issuing declaratory judgments holding state tax laws unconstitutional. 457 U.S. at 408, 102 S.Ct. at 2507. Nevertheless, they assert that declaratory relief is only unavailable under the same circumstances that injunctive relief is unavailable; that is, only when the collection of state taxes is interfered with. Respondents thus contend that there is no bar here to injunctive or declaratory relief.
We do not believe that the Grace Brethren ruling was as narrow as respondents contend. First of all, the Tax Injunction Act does not speak only to the collection of taxes; it refers as well to the...
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