Pechiney Corp. v. Crystal

• Citation: 643 A.2d 319,43 Conn.Supp. 91
• Decision Date: 13 January 1994
• Docket Number: 528967,Nos. 528927,s. 528927
• Court: Superior Court of Connecticut. Connecticut Superior Court — Tax Session
• Parties: PECHINEY CORPORATION v. Alan A. CRYSTAL, Commissioner of Revenue Services. ALUMAX INC. v. Alan A. CRYSTAL, Commissioner of Revenue Services.

Page 319

643 A.2d 319

43 Conn.Supp. 91

PECHINEY CORPORATION v. Alan A. CRYSTAL, Commissioner of Revenue Services.

ALUMAX INC. v. Alan A. CRYSTAL, Commissioner of Revenue Services.

Nos. 528927, 528967.

Superior Court of Connecticut,

Tax Session.

Jan. 13, 1994.

Day, Berry & Howard, for plaintiff in the first case.

Robinson & Cole and Jones, Day, Reavis & Pogue, pro hac vice, for plaintiff in the second case.

Richard K. Greenberg and John G. Haines, Asst. Attys. Gen., with whom was Richard Blumenthal, Atty. Gen., for defendant in both cases.

BLUE, Judge.

Our constitution, Alexander Hamilton observed two centuries ago, is "founded upon the total or partial incorporation of a number of distinct sovereignties." A. Hamilton, "The Federalist" No. 82, reprinted in 2 The Debate on the Constitution (1993) p. 493. Such a union, he observed, "cannot fail to originate questions of intricacy and nicety.' Id. One such recurrent question involves the jurisdiction of state courts to hear federal causes of action. The specific question presented here is whether this court has jurisdiction to hear a cause of action under 42 U.S.C. § 1983 that has been appended to a state tax appeal.

The taxpayers in the present actions have each filed an appeal from a decision of the commissioner of revenue services (commissioner) pursuant to General Statutes § 12-237. The allegations in the appeals are similar. The taxpayers contend that they incurred net losses in the taxable years in question and filed combined corporate business tax returns under General Statutes § 12-223a properly reflecting those losses. They allege that the commissioner erroneously reallocated those losses to subsidiary corporations. They further contend that the commissioner's action, in addition to being statutorily erroneous, violated a number of provisions of the state and federal constitutions, including the commerce, due process and equal protection clauses. These allegations are set forth in a number of separate counts. Each appeal then adds a final count that is the subject of the motions presented here. Each final count alleges that the commissioner acted under color of state law and that his actions violated 42 U.S.C. § 1983 by depriving the taxpayers of rights, privileges and immunities secured by the constitution of the United States. In their prayers for relief, the taxpayers ask that the assessments be set aside, that attorney's fees be awarded, and that this court grant them such other relief as may be proper and equitable. Because the disputed taxes have not yet been paid, the taxpayers do not ask for monetary relief. Rather they ask for a declaratory ruling that they are not obliged to pay the taxes in question.

The commissioner has filed a motion to dismiss the final count in each case. (None of the earlier counts are challenged at this stage.) His argument has two components. He argues first that an action under § 1983 cannot be maintained to challenge the assessment of a state tax in state court. He argues next that, while acting in his official capacity he is not subject to a suit in state court for money damages under § 1983. These arguments will be considered in turn.

Before turning to the merits, however, it is important to note that the motions to dismiss rely entirely upon the allegations set forth in the taxpayers' appeals and do not seek to introduce any additional facts outside of the record. See Practice Book § 143. The commissioner expressly declined to submit evidence in support of his claims. Under these circumstances, the truth of the taxpayers' factual allegations must be assumed. "A motion to dismiss properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a course of action that should be heard by the court." (Emphasis in original.) Baskin's Appeal from Probate, 194 Conn. 635, 640, 484 A.2d 934 (1984). Thus, the question presented here is whether the taxpayers as a matter of law and fact can possibly state a cause of action under 42 U.S.C. § 1983 that should be heard by the court.

I THE CHALLENGE TO THE STATE TAX

Section 1983 provides in relevant part: "Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State ... subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress...." "A broad construction of § 1983 is compelled by the statutory language, which speaks of deprivations of 'any rights, privileges, or immunities secured by the Constitution and laws.' (Emphasis added.)" Dennis v. Higgins, 498 U.S. 439, 443, 111 S.Ct. 865, 868, 112 L.Ed.2d 969 (1991). Just as the statutory text sets forth no limitation on the types of constitutional claims that may be asserted in the cause of action it provides, it does not limit the judicial fora in which such an action may be pursued. "State courts have concurrent jurisdiction with federal courts over § 1983 claims. Maine v. Thiboutot, 448 U.S. 1, 3 n. 1, 100 S.Ct. 2502, [2503 n. 1], 65 L.Ed.2d 555 (1980)...." Zizka v. Water Pollution Control Authority, 195 Conn. 682, 687, 490 A.2d 509 (1985); see Arkansas Writers' Project, Inc. v. Ragland, 481 U.S. 221, 234, 107 S.Ct. 1722, 1730, 95 L.Ed.2d 209 (1987); Martinez While there is no doubt in view of the precedent just cited that state courts have jurisdiction over § 1983 claims generally, whether state courts can or must assume jurisdiction over challenges to the assessment of the state taxes under § 1983 "is not entirely clear." Arkansas Writers' Project, Inc. v. Ragland, supra, 481 U.S. at 234 n. 7, 107 S.Ct. at 1730 n. 7. The doubts that have arisen have focused on three considerations: (1) the limitations, if any, imposed by the Tax Injunction Act of 1937, 28 U.S.C. § 1341; (2) the limitations, if any, imposed by the existence of a state appellate remedy, in this instance § 12-237, which allows appeals of corporation business tax determinations to be taken to this court; and (3) (in Connecticut) the preclusive effect (if any) of the state Supreme Court's 1985 decision in Zizka. These considerations must be analyzed in turn.

v. California, 444 U.S. 277, 283 n. 7, 100 S.Ct. 553, 558 n. 7, 62 L.Ed.2d 481 (1980).

First, 28 U.S.C. § 1341 provides: "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." On its face, § 1341 applies only to the federal district courts. "The Tax Injunction Act embodied Congress' decision to transfer jurisdiction over a class of substantive federal claims from the federal district courts to the state courts...." Rosewell v. LaSalle National Bank, 450 U.S. 503, 515 n. 19, 101 S.Ct. 1221, 1230, 67 L.Ed.2d 464 (1981). Because § 1341 "is rooted in principles of federalism," our Supreme Court held in Zizka that that statute "does not deprive state courts of all jurisdiction to hear § 1983 challenges to state taxes." Zizka v. Water Pollution Control Authority, supra, 195 Conn. at 689-90, 490 A.2d 509.

The commissioner does not argue that § 1341 in and of itself deprives this court of jurisdiction to hear the taxpayers' § 1983 claims. His argument rather is one of inference and balance. Because the federal courts cannot hear § 1983 actions of this character, it would be, in his estimation, anomalous for the state courts to hear such actions and thus, at least in this regard, to have a jurisdiction superior to that of the federal courts.

This argument misapprehends the basic structure of our judicial system. "[F]ederal courts ... are courts of limited jurisdiction marked out by Congress." Aldinger v. Howard, 427 U.S. 1, 15, 96 S.Ct. 2413, 2420, 49 L.Ed.2d 276 (1976). State superior courts, in contrast, are courts of general jurisdiction. In Connecticut, as in most states, "[w]here a decision as to whether a court has subject matter jurisdiction is required, every presumption favoring jurisdiction should be indulged." Demar v. Open Space & Conservation Commission, 211 Conn. 416, 425, 559 A.2d 1103 (1989); see generally 13 Wright, A. Miller & E. Cooper, Federal Practice and Procedure (2d Ed.1984) § 3522.

In a judicial system characterized by this architecture, it is not at all anomalous for state courts to have jurisdiction over matters that federal courts cannot lawfully adjudicate. Domestic relations matters are an obvious example. See Ankenbrandt v. Richards, 504 U.S. ----, ----, 112 S.Ct. 2206, 2215, 119 L.Ed.2d 468 (1992). State tax appeals are another. There are numerous " 'special reasons justifying the policy of federal noninterference with state tax collection....' " Fair Assessment in Real Estate Assn., Inc. v. McNary, 454 U.S. 100, 108 n. 6, 102 S.Ct. 177, 182 n. 6, 70 L.Ed.2d 271 (1981), quoting Perez v. Ledesma, 401 U.S. 82, 127-28 n. 17, 91 S.Ct. 674, 698-99 n. 17, 27 L.Ed.2d 701 (1971) (Brennan, J., concurring and dissenting). These concerns of comity, however, in no way foreclose state courts from hearing § 1983 actions in conjunction with state tax appeals. Neither the letter nor spirit of § 1341 are violated by the existence of such state court jurisdiction. This jurisdiction, in fact, fully implements the policies of both § 1983 (i.e., the vindication of civil rights) and § 1341 (i.e., the noninterference of federal courts in state tax matters) in a way that federal jurisdiction does not.

Second, § 12-237 unquestionably provides an appellate remedy for taxpayers aggrieved by the commissioner's corporation business This most emphatically does not mean, however, that the existence of § 12-237 preempts the field or that this issue is much ado about nothing. This is...