Hondo, Inc. v. Sterling, 93-1562

• Decision Date: 13 April 1994
• Docket Number: No. 93-1562,93-1562
• Citation: 21 F.3d 775
• Parties: HONDO, INCORPORATED, d/b/a Coca-Cola Bottling Company of Chicago, an Indiana Corporation, Marvin J. Herb and Metro Metals Corporation, an Illinois Corporation, Plaintiffs-Appellants, v. Jacquelyn M. STERLING, in her official capacity as Auditor of Porter County, Indiana, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 775

21 F.3d 775

HONDO, INCORPORATED, d/b/a Coca-Cola Bottling Company of

Chicago, an Indiana Corporation, Marvin J. Herb and Metro Metals Corporation, an Illinois Corporation, Plaintiffs-Appellants, v. Jacquelyn M. STERLING, in her official capacity as Auditor

of Porter County, Indiana, Defendant-Appellee.

No. 93-1562.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 2, 1993.

Decided April 13, 1994.

Steven W. Handlon (argued), Handlon & Handlon, Portage, IN, for plaintiffs-appellants.

Robert A. Welsh (argued), Harris, Welsh & Lukmann, Chesterton, IN, David L. Hollenbeck (argued), Blachly, Tabor, Boxik & Hartman, Valparaiso, IN, for defendant-appellee.

Before WOOD, Jr., CUDAHY, and MANION, Circuit Judges.

MANION, Circuit Judge.

Jacquelyn M. Sterling, as Auditor of Porter County, Indiana, denied Hondo Incorporated ("Hondo") and Metro Metals Corporation ("Metro Metals") a tax abatement. Hondo and Metro Metals filed Sec. 1983 actions against Sterling, in her official capacity. Sterling moved to dismiss these actions, asserting that they were barred by the statute of limitations. The magistrate judge granted Sterling's motions. After consenting in writing to final judgment by the magistrate, Hondo and Metro Metals appealed. We affirm.

I. Background

In order to promote real estate development, Indiana has passed a tax abatement statute which allows persons constructing improvements on Indiana real estate in certain "economic revitalized areas" ¹ to receive a reduction or "abatement" of the tax increase which results from the improvements. Ind.Code Sec. 6-1.1-12.1-1. The tax abatement extends over ten years with a declining percentage of tax abated each year. ²

To qualify for a tax abatement, the owner or user of the real estate must file an Application for Deduction from Assessed Valuation with the auditor of the county in which the real estate is located. The application must be filed by the later of: (a) May 10 of the year in which the improvements are completed; or (b) thirty days following the date that Form 11 (entitled Notice of Assessment to Land and Improvements) is mailed to the property owner at the address shown on the records of the township assessor. Ind.Code Sec. 6-1.1-12.1-5(b). If the application is not timely filed, but is otherwise complete, the taxpayer will receive a tax abatement but only for the years remaining on the abatement schedule. The auditor in the county in which the real estate is located decides whether the application for tax abatement is timely, as well as whether it should be granted or denied. No administrative mechanism exists to challenge the auditor's decision.

II. Statement of Facts

Against this backdrop, we consider Hondo and Metro Metals' situation. Both Hondo and Metro Metals are taxpayers who own taxable interests in real estate located in Porter County, Indiana. On or about April 19, 1988, the Portage County assessor mailed a notice of assessment to Hondo. The notice was incorrectly addressed and not received by Hondo. On January 19, 1989 Hondo filed an abatement application for 1988 real estate taxes. Sterling denied the application as untimely, finding that the statute required Hondo to file the application within thirty days of April 19, 1988, the later of Section 6-1.1-12.1-5(b)'s timing requirements. In reaching this determination, Sterling determined that the thirty days began running, even though the notice was sent to an incorrect address, because the address used was the one contained in the assessor's records.

Similarly, on or about April 23, 1986, the Porter County Assessor mailed Metro Metals a notice of assessment. This notice was also incorrectly addressed and not received by Metro Metals. On approximately May 16, 1988 Metro Metals filed an application for a tax abatement for 1986 taxes. Sterling also denied this application as untimely, finding that Metro Metals should have filed the application within thirty days of April 23, 1986. Again Sterling concluded that the thirty days began running from the date the notice was mailed, even though it was sent to an incorrect address, because the address used was the one contained in the assessor's records.

Because no administrative mechanism exists to challenge Sterling's decision, Hondo and Metro Metals filed suit in Porter County, Indiana, seeking a declaratory judgment that Ind.Code Sec. 6-1.1-12.1-5(b) required notice to be mailed to a correct address, if known. Hondo's complaint was filed on January 16, 1990 and Metro Metals' was filed on October 11, 1988. Hondo's action is still pending. Metro Metals' action was dismissed, and this dismissal was affirmed by the Indiana Court of Appeals on December 19, 1990. Metro Metals attempted to appeal that decision, but the Indiana Supreme Court denied leave for transfer on May 20, 1991. Metro Metals and Hondo responded by filing this Sec. 1983 action against Sterling in federal court on March 13, 1992. Sterling moved to dismiss the complaint claiming that the Sec. 1983 claims were barred by the statute of limitations. The district court agreed and dismissed the complaint under Rule 12(b)(6). ³ Hondo and Metro Metals appeal.

III. Analysis

We have jurisdiction to review the magistrate's 12(b)(6) dismissal because the parties consented in writing to the entry of a final judgment by the magistrate. 28 U.S.C. Sec. 636(c)(3). We review a 12(b)(6) dismissal de novo. Caldwell v. City of Elwood, 959 F.2d 670, 671 (7th Cir.1992). A Rule 12(b)(6) motion to dismiss will be granted only if "it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). Applying this standard, we must determine whether Hondo and Metro Metals' Sec. 1983 claims are barred by the statute of limitations.

Hondo and Metro Metals make two arguments in support of their position that their Sec. 1983 claims are not barred by the statute of limitations. First, they argue that the Sec. 1983 claim did not accrue until the Indiana Supreme Court refused to grant leave for transfer on May 20, 1991. Second, they claim that even if the cause of action accrued before that date, it was tolled while the state action was pending. We consider both issues in turn.

A. Accrual of Statute of Limitations

A Sec. 1983 action is subject to the statute of limitations governing personal injury claims in the state where the alleged injury occurred. Wilson v. Garcia, 471 U.S. 261, 279, 105 S.Ct. 1938, 1948-49, 85 L.Ed.2d 254 (1985); Wilson v. Giesen, 956 F.2d 738, 740 (7th Cir.1992). The alleged injury in this case occurred in Indiana. The Indiana statute of limitations for personal injury requires a suit to be filed within two years of the accrual of the cause of action. Ind.Code Sec. 34-1-2-2(1). Federal law determines when a claim accrues. Giesen, 956 F.2d at 740. A Sec. 1983 claim accrues when the plaintiff knows or has reason to know of the injury which is the basis of his action. Id.

The injury which Hondo and Metro Metals complain of is a deprivation of a property right--in this case, a tax abatement--without due process. ⁴ While it is unclear the exact date that Hondo and Metro Metals knew that they were denied tax abatements, it is clear that they knew of the injury when they filed suit against Sterling in state court. Therefore, by January 16, 1990 Hondo knew of its injury and by October 11, 1988 Metro Metals knew of its injury. This was more than two years before they filed their Sec. 1983 complaint on March 13, 1992. Therefore, the statute of limitations bars these actions. See Kelly v. City of Chicago, 4 F.3d 509, 512-13 (7th Cir.1993).

In response, Hondo and Metro Metals claim that their Sec. 1983 claim could not accrue until their claims were ripe for adjudication and they assert that this did not occur until the Indiana Supreme Court denied their motion for leave to transfer on May 20, 1991. They point to Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985), in support of their position. In Williamson County, the Supreme Court held that a violation of a governmental regulation is only ripe for adjudication once "the government entity charged with implementing the regulation has reached a final decision" regarding its application. Id. at 186, 105 S.Ct. at 3116. Here the county auditor, the government entity charged with implementing the tax abatement statute, reached her final decision not to allow the abatement well before the Indiana Supreme Court denied transfer. The auditor's decision could not be appealed. ⁵ Thus, Williamson County, if anything, only supports the proposition that the claim in this case accrued when Sterling denied the abatements, which was more than two years before Hondo and Metro Metals got around to filing this suit. Moreover, we have held that "the availability of a state appeals process had no ... effect on the accrual date" for a Sec. 1983 claim. Kelly, 4 F.3d at 512.

Appellants respond that the state court is the governmental entity which must act before their claim is ripe because if the state court were to grant them a declaration that they were entitled to tax abatements this case would be unnecessary. In Harlan Sprague Dawley, Inc. v. Indiana Dep't of Revenue, 583 N.E.2d 214 (Ind.Tax 1991), the Indiana Tax Court used this very rationale to support its jurisdiction to hear not only the challenge to an Indiana sales tax law under state law but also under Sec. 1983. Prior to Harlan Sprague it was well established that state courts have "concurrent jurisdiction to enforce rights created by a federal statute," such as Sec. 1983. Colvin v. Bowen, 399 N.E.2d 835, 837 (Ind.App.1980); Harlan Sprague, 583 N.E.2d at 217. Thus, in Harlan Sprague the question was not whether Sec. 1983 jurisdiction existed in state courts, but whether it existed in state...