Robinson v. Villines

• Decision Date: 21 January 2010
• Docket Number: No. 09–671.,09–671.
• Citation: 2009 Ark. 632,362 S.W.3d 870
• Parties: J.B. ROBINSON, et al., Appellants, v. Floyd G. “Buddy” VILLINES, et al., Appellees.
• Court: Arkansas Supreme Court

2009 Ark. 632

362 S.W.3d 870

J.B. ROBINSON, et al., Appellants,

v.Floyd G. “Buddy” VILLINES, et al., Appellees.

No. 09–671.

Supreme Court of Arkansas.

Dec. 17, 2009.Rehearing Denied Jan. 21, 2010.

Hatfield & Sayre, by: Eugene G. Sayre, Little Rock, for appellants.

Thomas Carpenter, City Att'y, for appellee City of Little Rock.

Nichols & Campbell, P.A., by: H. Gregory Campbell, Little Rock, for appellees Bobby L. Roberts and Central Arkansas Library System.Karla M. Burnett and Amanda Mankin–Mitchell, Pulaski County Attorney's Office, Little Rock, for appellees Floyd G. “Buddy” Villines, Janet Troutman Ward, Debra Buckner, Mark Stodola, and Pulaski County, Arkansas.JIM GUNTER, Associate Justice.

This case involves a complaint filed by a group of individuals paying personal and real property taxes in the City of Little Rock who were subject to an increase in library millage rates for the tax year 2007. On appeal, the taxpayer-appellants claim that the circuit court erred in applying Ark.Code Ann. § 14–14–904(b)(3) (Supp.2009) to the facts of this case and that the appellees failed to adhere to the clear requirements of the statute. On cross-appeal, the City of Little Rock and Pulaski County assert that the circuit court did not have subject-matter jurisdiction to hear the case and that it erred in denying their motion to dismiss on those grounds. Because this case involves the construction and interpretation of the Arkansas Constitution and the interpretation of our statutes as they pertain to an illegal exaction, our jurisdiction is pursuant to Rule 1–2(a)(1) of the Rules of the Arkansas Supreme Court.

The facts of this case were stipulated by all parties below and are not in dispute. During the summer of 2007, the Central Arkansas Library System (CALS) Board of Trustees requested a taxpayer vote to increase the millage rates for public libraries within the city limits of Little Rock. On September 18, 2007, the City of Little Rock Board of Directors enacted Ordinances No. 19,827 and No. 19,828 setting a special election for November 13, 2007. Later, on October 2, 2007, the board enacted companion ordinances No. 19,829 and No. 19,830 amending the date of the special election to December 11, 2007. Thereafter, it enacted Ordinance No. 19,854 on November 6, 2007, establishing the ad valorem tax rates for 2007 at 2.8 mills for operating and maintaining the city's libraries and 1.0 mill for funding the repayment of capital-improvement bonds. Pursuant to Ark.Code Ann. § 14–14–904, the Pulaski County Quorum Court enacted Ordinance No. 07–OR–84 on November 27, 2007, levying the ad valorem library taxes as 2.8 mills and 1.0 mill. On December 11, 2007, voters in the special election approved a library millage increase from 2.8 to 3.3 mills for maintenance and operation and from 1 mill to 2 mills for bond indebtedness. No challenge to the election results was filed within the period provided for by law.

On January 8, 2008, the city board enacted Ordinance No. 19,903 amending Ordinance No. 19,854 to reflect the millage increases as approved by the voters. Thereafter, on January 11, 2008, Pulaski County Judge Villines signed Order No. 08–010 finding that pursuant to Ark.Code Ann. § 14–14–904, he had jurisdiction to correct clerical errors, scrivener's errors, or failure of a taxing entity to report correct millage rates to the quorum court. The order set the correct library millage rate as 4.3 mills. However, three days later, an employee of the Pulaski County Treasurer's Office noticed that the millage rate on the court order was incorrect, and Judge Villines entered Order No. 08–013 on January 14, 2008, indicating that the library millage rate was 3.3 mills for maintenance and operation and the capital-improvements millage rate was 2.0 mills. Following entry of that order, Pulaski County Treasurer Debra Buckner computed the 2007 ad valorem library taxes imposed on all nonexempt real and personal property located within the City of Little Rock as 3.3 and 2.0 mills.

On May 14, 2008, the taxpayers filed an illegal-exaction complaint in Pulaski County Circuit Court against County Judge Floyd G. “Buddy” Villines; Tax Assessor Janet Troutman Ward; Treasurer Debra Buckner; Pulaski County, Arkansas; the City of Little Rock; Little Rock Mayor Mark Stodola; CALS; and CALS director Bobby Roberts in Pulaski County Circuit Court asserting that the millage rate increase benefitting CALS approved by voters in December 2007 was retroactively applied to ad valorem taxes for 2007 in violation of Ark.Code Ann. § 14–14–904(b). The taxpayers alleged that any attempt to levy and collect an increase in library taxes imposed for the 2007 tax year constituted an illegal exaction. They requested a declaratory judgment, reimbursement, and injunctive relief.

The Pulaski County defendants filed a motion to dismiss arguing that the circuit court lacked subject-matter jurisdiction because the taxpayers failed to appeal from the county court order within the thirty-day time limit required by District Court Rule 9.¹ Prior to a hearing on February 24, 2009, the circuit court denied the motion to dismiss on jurisdictional grounds. The parties agreed to and submitted stipulated facts and documents, including the following: the taxpayers were not challenging the validity of the 2008 ad valorem library taxes but only the taxes for 2007 to be collected in 2008; there was no challenge to the validity of the special election held in December 2007; the taxpayers were not challenging that the taxes at issue had been used for any purpose not approved by the voters; and all parties agreed that ordinances 19,829 and 19,830 were “referred” to the voters in December 2007 and that the voters “repealed” the previous millage rates. ²

In an order entered on February 26, 2009, the circuit court found that it had subject-matter jurisdiction pursuant to article 16, section 13 of the Arkansas Constitution (illegal exaction) and granted judgment in favor of defendants. The circuit court determined that § 14–14–904(b)(3) was discretionary not mandatory, and that regardless, the quorum court's actions were only ministerial. The circuit court found that the assessment and collection of an increased library millage for the 2007 tax year was not unconstitutional, unauthorized, or prohibited by law. The taxpayers filed a timely notice of appeal from the judgment. The City of Little Rock and Pulaski County litigants filed notices of cross-appeal from the judgment asserting that the circuit court lacked subject-matter jurisdiction.

As a threshold matter, the county and city cross-appellants' claim that the circuit court erred in denying their motion to dismiss on jurisdictional grounds. They assert that the circuit court lacked subject-matter jurisdiction because the taxpayers did not appeal from Pulaski County Court Order 08–013 within thirty days as required by District Court Rule 9(e) (2009)—instead filing a new action in circuit court—and because the taxpayers did not state a valid claim for illegal exaction allowing their case to be brought for the first time in circuit court. In their response, the taxpayers maintain that they are not appealing the county court order, but rather they are asserting that any attempt to collect taxes based on the increased millage rate for 2007 is an illegal exaction because the city and county did not adhere to the requirements of Ark.Code Ann. § 14–14–904.

Pursuant to the Arkansas Constitution, article 7, section 33, all judgments of county courts are appealable to circuit court under such restrictions and regulations as prescribed by law. District Court Rule 9(e) provides that

a party may take an appeal from the final judgment of a county court by filing a notice of appeal with the clerk of the circuit court having jurisdiction over the matter within thirty (30) days from the date that the county court filed its order with the county clerk. See also Pike Ave. Dev. Co. v. Pulaski County, 343 Ark. 338, 37 S.W.3d 177 (2001). As the taxpayers did not timely appeal from the county court order, jurisdiction in both the circuit court and this court rests on whether they properly stated a cause of action in illegal exaction. A suit to prevent the collection of an illegal or unauthorized tax is an illegal exaction suit, and subject-matter jurisdiction is concurrently in circuit court. ³ Hoyle v. Faucher, 334 Ark. 529, 975 S.W.2d 843 (1998) (quoting Foster v. Jefferson Co. Quorum Ct., 321 Ark. 105, 901 S.W.2d 809 (1995) ( Foster I ), supp. op. granting reh'g, 321 Ark. 116–A, 901 S.W.2d 809 (1995) ( Foster II ) (rehearing granted on other grounds)). Article 16, section 13 of the Arkansas Constitution grants the citizens of Arkansas standing to pursue an illegal-exaction claim. An illegal exaction is defined as any exaction that either is not authorized by law or is contrary to law. White v. Ark. Capital Corp./Diamond State Ventures, 365 Ark. 200, 226 S.W.3d 825 (2006). There are two types of illegal-exaction cases: “public funds” cases, where the plaintiff contends that public funds generated from tax dollars are being misapplied or illegally spent and “illegal-tax” cases, where the plaintiff asserts that the tax itself is illegal. Id. This court has strictly adhered to the rule that, if the taxes complained of are not themselves illegal, a suit for illegal exaction will not lie. Hambay v. Williams, 373 Ark. 532, 285 S.W.3d 239 (2008) (citing Pockrus v. Bella Vista Village Prop. Owners Ass'n, 316 Ark. 468, 872 S.W.2d 416 (1994)). A flaw in the assessment or collection procedure, no matter how serious from the taxpayer's point of view, does not make the exaction itself illegal. Id.

The substance of the taxpayers' claim is that neither the county judge nor the city had authority to impose the increase in millage retroactively to 2007 taxes. We have held that the definition of an illegal exaction is any exaction that is not...