U.S. v. Clark County, Indiana
| Decision Date | 17 December 2002 |
| Docket Number | No. NA 99-230-C-B/H.,NA 99-230-C-B/H. |
| Citation | 234 F.Supp.2d 934 |
| Parties | UNITED STATES of America, Plaintiff, v. CLARK COUNTY, INDIANA, Defendants. |
| Court | U.S. District Court — Southern District of Indiana |
Jeffrey L. Hunter, United States Attorney's Office, Indianapolis, IN, David Katinsky, Trial Attorney Tax Division, U.S. Dept of Justice, Washington, DC, for Plaintiff.
David A. Arthur, Deputy Attorney General, Indianapolis, IN, John W. Doehrman, Jeffersonville, IN, Gayle Reindl, Sommer Barnard Ackerson Pc, Indianapolis, IN, for Defendant.
Professor Lawrence Tribe, the noted constitutional scholar, discussed at length and in eloquent detail in a 1976 Harvard Law Review article (89 Harvard Law Review 682 (1976)), the issue now before this Court, to wit, the scope of federal immunity from state taxation, describing the legal decisions relating to this issue as a "bew-ilderingly complex array of judicial decisions." 89 Harv.L.Rev. 682, 704. We fully agree with that characterization; in addition, the decisions handed down since Professor Tribe's article have not made the analysis any less bewildering. Nevertheless, we have soldiered on in an effort to determine whether a corporation which entered into a "Facilities Use Agreement" with the federal government is entitled to immunity from state imposed property taxes. Added to this "bewilderingly complex" issue is an additional question: whether the United States, as Plaintiff, is precluded by the doctrine of res judicata or collateral estoppel from challenging the assessments of taxes previously affirmed by Indiana state courts.
We have before us the cross-motions for summary judgment by the Plaintiff, United States of America ("United States"), and the Defendant, Clark County, Indiana ("Clark County"). Additionally, the Attorney General of the State of Indiana has filed an Amicus Curiae brief, pursuant to 28 U.S.C. § 2403(b) and S.D. Ind. Local Rule 24.1, as the constitutionality of an Indiana statute (IND.CODE § 6-1.1-10-37) has been challenged by the United States.
The United States seeks to prevent Defendant, Clark County, from assessing, imposing or collecting a tax with respect to vacant buildings located at the Indiana Army Ammunition Plant ("Plant").1 The size of the Plant approximates 10,000 acres located near Charlestown, Indiana, which is owned by the United States and operated under the jurisdiction of the United States Operations Support Command (formerly the Industrial Operations Command) ("the Army"), based in Rock Island, Illinois. The Plant contains 1,633 real property structures, including 176 storage igloos or magazines originally designed and utilized for the manufacture and storage of high explosives. From 1940 through 1992, the Army permitted the manufacture of military propellants at the Plant by civilian contractors, one of whom was ICI. In 1992, the Plant was deactivated and ceased manufacture of military propellants.
Also, in 1992, Congress passed the Armament Retooling and Manufacture Support Act of 1992, P.L. No. 102-484 ("Arms Act"), pursuant to which Congress granted the Army the authority to convert unused government-owned ammunition plants, or parts thereof, to civilian use facilities. There were nine specified purposes included in the Arms Act: (1) to encourage the commercial use of government-owned, contractor-operated ("GOCO") facilities; (2) to enable small business and small disadvantaged business use of GOCOs; (3) to reduce the adverse effects of downsizing on communities; (4) to re-employ and retain skilled workers; (5) to attain economic stability in depressed areas; (6) to maintain the workforce skills necessary for national security purposes; (7) to provide a model for future defense conversion programs; (8) to allow GOCOs to be responsive in free market competition; and (9) to relocate off-shore production to the United States. Pub.L.No. 102-484, Sec. 193(b) (as noted with 10 U.S.C. § 2501).
Prior to the passage of the Arms Act, the United States had contracted with a corporation known as ICI Americas, Inc. (hereafter "ICI") to perform certain functions at the Plant. Clark County levied a 1995 tax against ICI based upon vacant Plant buildings, pursuant to IND.CODE § 6-1.1-10-37. The United States asserts that this was an unconstitutional tax levy in that it was, in reality, a tax against the United States, in violation of the Supremacy Clause of the Constitution. Clark County contends that the tax was in fact levied only against ICI, not the United States, and that it was based on ICI's leasehold interest in the vacant buildings at the Plant. Additionally, noting that the Indiana State Board of Tax Commissioners ("State Board") upheld these tax levies and later dismissed ICI's appeal of those decisions, Clark County asserts res judicata and collateral estoppel as bars to relitigation of most of these taxation issues.
In our order of September 18, 2000, denying Clark County's Motion to Dismiss, we set out the law concerning collateral estoppel, or issue preclusion, and its application in this case. See U.S. v. Clark County, Ind., 113 F.Supp.2d 1286, 1290-91 (S.D.Ind.2000). We see no reason to reiterate that discussion here, but will move to apply those principles to the facts and arguments here, in light of the parties' motions and briefs in support of their respective motions for summary judgment.
In order to establish claim preclusion under Indiana law, the proponent must establish that: (1) the former judgment was issued by a court with jurisdiction; (2) the matter now in issue was or might have been determined in the former suit; (3) the parties or their privies are identical; and (4) there was a judgment on the merits. Breeck v. City of Madison, 592 N.E.2d 700, 704-05 (Ind.Ct.App.1992). The parties' dispute here centers on the first and third requirements; namely, whether the Indiana Tax Court had jurisdiction over ICI's appeal of Clark County's tax levy and whether ICI and the United States are in privity with one another.
Regarding the first requirement, the United States asserts that the Tax Court did not have jurisdiction over ICI's appeal because ICI never perfected that appeal. Additionally, the United States contends that the Tax Court's order stated that the appeal was dismissed for lack of jurisdiction. We recognize that Indiana courts use the term "jurisdiction" in varying ways. "Jurisdiction is comprised of three elements: (1) jurisdiction of the subject matter; (2) jurisdiction of the person; and (3) jurisdiction of the particular case." Browning v. Walters, 620 N.E.2d 28, 31 (Ind.Ct.App.1993) (citing Harp v. Indiana Dept. of Highways, 585 N.E.2d 652, 659 (Ind.Ct.App.1992)). When the Tax Court dismissed ICI's appeal for lack of jurisdiction, its action reflected the fact that ICI had failed to perfect its appeal. ICI neglected to perform the statutorily required duty to serve copies of its appeal on the Clark County Assessor. This lack of jurisdiction, as noted in the order dismissing ICI's appeal, involved jurisdiction over that particular case, not a lack of jurisdiction over the subject matter, or the class of cases. Moreover, pursuant to the holding in Browning, a dismissal based on a litigant's failure to comply with the rules amounts to a dismissal with prejudice on the merits. See Browning, 620 N.E.2d at 31-32.
A similar situation was presented in Yellow Cab Co. of Bloomington, Inc. v. Williams, 583 N.E.2d 774 (Ind.Ct.App. 1991). There, the Bloomington Human Rights Commission issued an adverse ruling to Yellow Cab based on a discrimination claim. Id. at 776. Yellow Cab sought judicial review of that decision, but its appeal was dismissed because it failed to timely file the administrative record.2 Id. When the Commission attempted to enforce its order through supplemental proceedings, Yellow Cab again sought judicial review. Id. at 777. On appeal, Yellow Cab sought to raise issues that it would have raised had its initial appeal not been dismissed; however, the Appellate Court concluded that res judicata barred Yellow Cab from raising those issues. Id. at 777-79. The Court noted that an actual trial need not occur for the doctrine of res judicata to apply. Id. at 777. "If the parties had a full legal opportunity to be heard on their respective claims but there is no actual hearing ... for a failure to comply with the statutory prerequisites-it is just as much a bar to further litigation as a judgment on the merits." Id. (citing Creech v. Town of Walkerton, 472 N.E.2d 226 (Ind.Ct.App.1984)). The Tax Court's decision in the instant case stated only that the dismissal was for a lack of jurisdiction; applying the Yellow Cab analysis, we must conclude that prior to its default in serving copies of its appeal on the Clark County Assessor, ICI had the opportunity to be heard on the merits when it lodged its appeal. Therefore, under Indiana law, the dismissal, though based on procedural error and occurring without a hearing, was on the merits, with prejudice, and thus has claim preclusive effect.
Regarding the (third) requirement of privity between ICI and the United States, "privity" under Indiana law, for res judicata purposes, "includes those who were in control of the earlier action even though they were not a party to it, and those whose interests are represented by a party to the action." Hermitage Ins. Co. v. Salts, 698 N.E.2d 856, 859 (Ind.Ct.App. 1998). In Montana v. U.S., 440 U.S. 147, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979), the Supreme Court noted that barring a showing that the government maintained a "laboring oar" in the state-court litigation, the preclusion doctrine is inapplicable to the United States. Id. at 155, 99 S.Ct. 970 (quoting Drummond v. U.S., 324 U.S. 316, 318, 65 S.Ct. 659, 89 L.Ed. 969 (1945)...
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