Lowe v. Washoe County
| Decision Date | 16 December 2010 |
| Docket Number | No. 09-15759,09-15759 |
| Citation | 627 F.3d 1151 |
| Parties | Todd LOWE; Janet Lowe; Tom Henderson; Nancy Henderson; J. Robert Anderson; Carole Anderson; Dean Ingemanson, Trustee of the Dean Ingemanson Trust; Kathy Nelson, Trustee of the Kathy Nelson Trust; and Arthur Berliner, Plaintiffs-Appellants, v. WASHOE COUNTY, a political subdivision of the State of Nevada; Josh Wilson, Washoe County Assessor; and Bill Berrum, Washoe County Treasurer, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Suellen Fulstone, Reno, NV, for the plaintiffs-appellants.
Nathan J. Edwards, Deputy District Attorney, Reno, NV, for the defendants-appellees.
Appeal from the United States District Court for the District of Nevada, Kent J. Dawson, District Judge, Presiding. D.C. No. 3:08-cv-00217-KJD-RAM.
Before: ROBERT R. BEEZER and SUSAN P. GRABER, Circuit Judges, and CORMAC J. CARNEY,* District Judge.
Plaintiffs Todd Lowe, Janet Lowe, Tom Henderson, Nancy Henderson, J. Robert Anderson, Carole Anderson, Dean Ingemanson, Kathy Nelson, and Arthur Berliner own residential real property in Incline Village and Crystal Bay, which are communities located on the North Shore of Lake Tahoe in Washoe County, Nevada. As the putative representatives of a class of approximately 9,000 Incline Village and Crystal Bay property owners, the nine plaintiffs filed a complaint under 42 U.S.C. § 1983 in federal district court against Defendants Washoe County, Washoe County Assessor Josh Wilson, and Washoe County Treasurer Bill Berrum. Plaintiffs allege that the valuation of their Nevada real property used to calculate their ad valorem property taxes for the 2008-09 taxable year violated both the Nevada Constitution and the Due Process Clause of the U.S. Constitution. They seek declaratory, injunctive, and other appropriate relief. The district court dismissed the complaint for lack of subject matter jurisdiction pursuant to the Tax Injunction Act (the "Act"), 28 U.S.C. § 1341, because a "plain, speedy and efficient remedy" is available in state court. Reviewing de novo, A-1 Ambulance Serv., Inc. v. California, 202 F.3d 1238, 1242-43(9th Cir.2000), we affirm.
While the present case addresses only the 2008-09 tax year, residents of Incline Village and Crystal Bay, including some of the plaintiffs in this case, previously challenged in state court the valuation methods employed by the Washoe County Assessor. Nevada law provides four levels of review to an aggrieved taxpayer. Property owners who disagree with the County Assessor's valuations of their property may file their challenges for a given tax year with the appropriate County Board ofEqualization. Nev.Rev.Stat. §§ 361.340(11), 361.355-.357. If unsuccessful before the County Board, property owners may appeal to the State Board of Equalization. Id. § 361.360. Dissatisfied property owners may then seek review of the State Board's decision in Nevada state trial court. Id. § 233B.130. If dissatisfied with the trial court decision, taxpayers may appeal to the Nevada Supreme Court. Id. § 233B.150.
The County Assessor reappraises taxpayers' real property every five years. Id. § 361.260(6). In 2002, the Washoe County Assessor conducted reappraisals of real property in Incline Village and Crystal Bay; those findings served as the base-year appraisals for the following five years beginning with the 2003-04 tax year.
Incline Village and Crystal Bay residents who disagreed with the increase in their 2003-04 property valuations filed individual petitions with the Washoe County Board of Equalization. The residents claimed that the Assessor used valuation methods that were neither promulgated in regulations by the Nevada Tax Commission nor employed elsewhere in Nevada. Though the residents' claims were unsuccessful before the County Board and the State Board, a Nevada trial court reviewed those decisions and held that the 2003-04 tax assessments were void because they violated the state constitution's guarantee of equal and uniform taxation. In 2006, the Nevada Supreme Court affirmed the trial court's decision. State ex rel. State Bd. of Equalization v. Bakst, 122 Nev. 1403, 148 P.3d 717 (2006) (en banc). The Nevada Supreme Court held that the Assessor's valuation methods were invalid under Article 10, Section 1, of the Nevada Constitution, which requires that property be taxed according to a uniform and equal rate of assessment. Id. at 721. The court awarded to the 17 individual plaintiff-residents who remained in the case refunds of all taxes attributable to the Assessor's invalid methodologies and ordered that the 2003-04 valuations be rolled back to the 2002-03 level. Id. at 726-27.
Incline Village and Crystal Bay taxpayers later filed individual petitions challenging the Washoe County Assessor's 2004-05 valuations, which relied on the same base-year appraisal as that used for the 2003-04 valuations. The County Board denied the taxpayers' petitions, and the State Board affirmed. Again, a state trial court reversed the State Board, declaring the Assessor's methods unconstitutional and the resulting valuations void. Accordingly, the court directed that refunds be paid to the approximately 37 taxpayers who remained in the case. In July 2008, the Nevada Supreme Court affirmed. That court held that the Assessor's methods continued to violate Article 10, Section 1, of the Nevada Constitution because the 2002 reappraisal, previously declared unconstitutional in Bakst, also served as the base-year appraisal for the 2004-05 valuations. State ex rel. State Bd. of Equalization v. Barta, 124 Nev. 58, 188 P.3d 1092 (2008) (en banc).
Incline Village and Crystal Bay residents later filed individual petitions challenging the Washoe County Assessor's 2005-06, 2006-07, and 2007-08 valuations, all of which relied on the same base-year appraisal as that used for the previous two tax years. Those cases remain pending in state trial court. Approximately 1,200 Incline Village and Crystal Bay taxpayers are currently pursuing individual appeals in the 2005-06 case, and approximately 900 already have received partial relief. Approximately 300 residents individually challenged their 2006-07 valuations, and approximately 900 individually challenged their 2007-08 valuations.
In 2007, the Washoe County Assessor reappraised all Incline Village and Crystal Bay residential real property for the 2008-09 tax year, initiating the next five-year appraisal cycle. Plaintiffs filed a class petition with the County Board. In that petition, Plaintiffs claimed that the Assessor used the same valuation methods in the 2007 reappraisal that previously had been declared unconstitutional by the Nevada Supreme Court in Bakst and Barta. The County Board denied Plaintiffs' petition on the ground that the Board lacked jurisdiction to hear class petitions. Plaintiffs then filed this suit in the United States District Court for the District of Nevada.
The federal district court granted Defendants' Federal Rule of Civil Procedure 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. The court reached its ruling after examining the administrative procedures and state court review available to dissatisfied Nevada taxpayers who challenge ad valorem taxes. The taxpayers' past successes before the Nevada Supreme Court also persuaded the district court that a "plain, speedy and efficient remedy" was available to Plaintiffs in state court. Plaintiffs timely appealed.
The Act provides that a district court "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. § 1341. "[T]he 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." Tully v. Griffin, Inc., 429 U.S. 68, 73, 97 S.Ct. 219, 50 L.Ed.2d 227 (1976). The Supreme Court repeatedly has characterized the Act as a " 'broad jurisdictional barrier,' " Arkansas v. Farm Credit Servs. of Cent. Ark., 520 U.S. 821, 825, 117 S.Ct. 1776, 138 L.Ed.2d 34 (1997) (quoting Moe v. Confederated Salish & Kootenai Tribes of Flathead Reservation, 425 U.S. 463, 470, 96 S.Ct. 1634, 48 L.Ed.2d 96 (1976)), which "limit[s] drastically federal district court jurisdiction to interfere with so important a local concern as the collection of taxes," California v. Grace Brethren Church, 457 U.S. 393, 408-09, 102 S.Ct. 2498, 73 L.Ed.2d 93 (1982) (internal quotation marks omitted). When applicable, the Act prohibits both declaratory and injunctive relief, id. at 408, 102 S.Ct. 2498, as well as § 1983 suits for damages, Fair Assessment in Real Estate Ass'n v. McNary, 454 U.S. 100, 113, 102 S.Ct. 177, 70 L.Ed.2d 271 (1981).
If a "plain, speedy and efficient remedy" is not available in state court, a federal district court may exercise jurisdiction over a party's challenge to a state tax. Federal courts, however, "must construe narrowly [this] exception to the [Act]." Grace Brethren Church, 457 U.S. at 413, 102 S.Ct. 2498. For the Act's jurisdictional prohibition to apply, the state court remedy need only meet "certain minimal procedural criteria." Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503, 512, 101 S.Ct. 1221, 67 L.Ed.2d 464 (1981). Specifically, the party challenging the state tax must have access to "a full hearing and judicial determination" of all federal constitutional objections to the tax. Id. at 513, 101 S.Ct. 1221(internal quotation marks omitted). The state court remedy need not be " 'the best remedy available or even equal to or better than the remedy which might be available in the federal courts.' "Mandel v. Hutchinson, 494 F.2d 364, 367 (9th Cir....
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