Heskett v. Athens Cnty.

STEVE HESKETT, II, et. al., Plaintiffs,

v.ATHENS COUNTY, et. al., Defendants.

Case No. 2:11-cv-00890

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO EASTERN DIVISION

DATED: March 19, 2013

JUDGE ALGENON L. MARBLEY

Mag. Judge Elizabeth Preston Deavers

OPINION AND ORDER

I. INTRODUCTION

This matter is before the Court on Plaintiffs' Motion for Preliminary Injunction (Doc. 16) and Defendants' Motion for Summary Judgment (Doc. 25). For the reasons stated herein the Court lacks subject matter jurisdiction and the action is, thus, DISMISSED. Plaintiffs' Motion for Preliminary Injunction and Defendants' Motion for Summary Judgment are both MOOT.

II. BACKGROUND

Plaintiffs, Steven Heskett II, Steven Heskett Sr., and Heskett Land Development Co., LLC ("HLDC") have brought suit against Defendants Athens County and County Auditor Jill Thompson alleging, under 42 U.S.C. § 1983, violations of the First and Fourteenth Amendments, as well as the Americans With Disabilities Act ("ADA"). Plaintiffs' claims stem from the tax valuation of a parcel of real property located at 177 Pinegrove Drive, Nelsonville, Ohio ("the parcel"), and owned by HLDC. Plaintiffs also filed a Motion for Preliminary Injunction seeking that Defendants be enjoined from proceeding with the foreclosure action on the parcel for the collection of unpaid property taxes.

Plaintiffs purchased the parcel at issue in early 2000 for $115,500.00 through a Sheriff's sale. Complaint, Doc 1 at 5. Prior to Plaintiffs' purchase , one of the buildings on the parcel was used as a school building. Id. The parcel had enjoyed tax-exempt status while used as a school by its previous owner. Id. In approximately June 2000, following Plaintiffs' purchase, Plaintiffs began using the property for religious activities including a "faith-based, non-profit youth camp for disadvantaged children and teens from inner-city Ohio communities." Id. At some point, following Plaintiffs' purchase of the parcel, Defendants reassessed the parcel's value. Id. Plaintiffs allege that the valuation was conducted without notice and was untimely under state law. Id. Plaintiffs also allege that three applications were filed seeking tax exempt status for the parcel at issue, the last of which was filed on December 30, 2010. Id. at 6. Defendants maintain, however, that the lone application filed by Plaintiffs was that of December 30, 2010, and that Defendants received no others before or since. Motion for Summary Judgment, Doc. 25 at 7. Indeed, Defendants cite to both Plaintiff Steven Heskett Sr.'s and Plaintiff Steven Heskett II's respective depositions as evidence that neither Plaintiff has evidence of filing a tax exempt application prior to December 30, 2010. Id. Furthermore, Defendants assert that HLDC was organized as a for-profit organization. There is no evidence that HLDC has ever sought or received tax exempt status as a 501(c)3 from the Internal Revenue Service. Id.

On May 29, 2008, a separate foreclosure action against HLDC was instituted by Talbott Consulting, Inc. in Athens County Common Pleas Court to foreclose on the parcel. Motion for Summary Judgment, Doc. 25 at 8. On September 15, 2009, the Athens County Treasurer moved to intervene to assert real estate tax liens against the parcel. Id. On December 21, 2010, in an Agreed Amended Statement of Facts, Plaintiffs stipulated that: (1) the current property taxes duewere $89,553.60; (2) the overdue amount was made based on valuations beginning in 2001; and (3) HLDC filed no written appeals to the County Auditor's valuations under O.R.C. Chapter 57. Id.

On October 12, 2011, the Athens County Common Pleas Court entered judgment against HLDC in the amount of $98,078.95 for real property tax liability. Id. Following this adverse decision in state court, without appealing the decision, Plaintiffs filed this suit, alleging, under 42 U.S.C. § 1983, violations of the First and Fourteenth Amendments, as well as the Americans with Disabilities Act. Plaintiffs seek injunctive relief and damages. Before the Court is Plaintiffs' Motion for a Preliminary Injunction (Doc. 16). In Defendants' Response (Doc. 17) and Motion for Summary Judgment (Doc. 25) they have alleged this Court lacks subject matter jurisdiction. The issue has been fully briefed and is ripe for adjudication.

III. STANDARD OF REVIEW

Subject matter jurisdiction is a threshold matter that a court must decide prior to considering a claim's merits. City of Health, Ohio v. Ashland Oil, Inc., 834 F.Supp. 971, 975 (S.D.Ohio 1993). The plaintiff has the burden of proving jurisdiction when subject matter jurisdiction is challenged. Rogers v. Stratton Indus., 798 F.2d 913, 915 (6th Cir.1986). Attacks on subject matter jurisdiction may be either facial attacks or factual attacks. United States v. Ritchie, 15 F.3d 592, 598. A facial attack challenges the legal sufficiency of the complaint. When considering such a challenge, the court "must take the material allegations of the petition as true and construe[] [them] in the light most favorable to the nonmoving party." Id.

IV. LAW AND ANALYSIS

Plaintiffs seek to enjoin a tax foreclosure proceeding instituted by Defendant AthensCounty for nonpayment of delinquent taxes. Essentially, Plaintiffs seek to restrict Defendant Athens County from levying taxes on Plaintiffs' real property. Plaintiffs assert federal question jurisdiction, 28 U.S.C. § 1331, on the basis of their ADA and § 1983 claims. Defendants counter that Congress divested this Court of jurisdiction over a suit seeking to enjoin collection of State taxes under 28 U.S.C. § 1341, Tax Injunction Act (the "TIA").

A. Tax Injunction Act

Under the TIA, this Court may 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 court of such State." 28 U.S.C. § 1341. The TIA is intended "to promote comity and to afford states the broadest independence, consistent with the federal constitution, in the administration of their affairs, particularly revenue raising." Wright v. McClain, 835 F.2d 143, 144 (6th Cir.1987); see also Thiokol Corp. v. Mich. Dep't of Treasury, 987 F.2d 376, 378 (6th Cir.1993) (quoting Fair Assessment in Real Estate Ass'n v. McNary, 454 U.S. 100, 103 (1981)). Where applicable, the TIA acts as a bar to federal jurisdiction. Hedgepeth v. Tennessee, 215 F.3d 608, 612 (6th Cir. 2000); see also Wenz v. Rossford Ohio Transp. Improvement Dist., 392 F. Supp. 2d 931, 935 (N.D. Ohio 2005).

As the Sixth Circuit has noted, "[t]he TIA has been interpreted broadly to bar suits for declaratory relief, injunctive relief, as well as monetary relief when there is an adequate remedy in state court." Hedgepeth, 215 F.3d at 612 n. 4 (citing California v. Grace Brethren Church, 457 U.S. 393, 408-10 (1982) and Nat'l Private Truck Council, Inc. v. Oklahoma Tax Comm'n, 515 U.S. 582, 586-88 (1995)). Similarly, in Thiokol Corp. the Sixth Circuit found that, although the TIA only specifically mentions injunctions, it also bars declaratory actions and suits seekingdamages under 42 U.S.C. § 1983. 987 F.2d at 378. See also California v. Grace Brethren Church, 456 U.S. at 407-411 (holding that the TIA precludes district courts from awarding declaratory judgments).

Generally, the TIA acts to bar jurisdiction even where Plaintiff alleges civil rights or constitutional claims. See Hedgepeth, 215 F.3d at 610 (finding the TIA applicable and thus granting dismissal for lack of subject matter jurisdiction where plaintiff's suit included claims under the Americans with Disabilities Act); see also Thiokol Corp., 987 F.2d at 378 ("This exclusion of federal courts from the state taxation area is so far reaching it precludes federal courts from declaring state tax laws unconstitutional."). Jurisdiction depends on whether the relief sought requires the federal court to 'enjoin, suspend or restrain the assessment, levy or collection of any tax under State law, not on whether a state tax law allegedly violates a federal statute or constitutional provision. See Hibbs v. Winn, 542 U.S. 88, 99 (2004) ("To determine whether this litigation falls within the TIA's prohibition, it is appropriate, first, to identify the relief sought.").

1. The Assessment at Issue is a "Tax"

The TIA applies only where the challenged assessment is a "tax." The Sixth Circuit holds that taxes are assessments made for revenue purposes, as opposed to fees which are assessments made for regulatory or punitive purposes. See Hedgepeth, 215 F.3d at 612; see also Am. Landfill, Inc. v. Stark/Tuscarawas/Wayne Joint Mgmt. Dist., 166 F.3d 835, 837 (6th Cir. 1999). The Sixth Circuit has adopted a three-factor test to determine whether an assessment is a tax or a fee: "(1) the entity that imposes the assessment; (2) the parties upon whom the assessment is imposed; and (3) whether the assessment is expended for general public purposes,or used for the regulation or benefit of the parties upon whom the assessment is imposed." American Landfill, 166 F.3d at 837; see also Hedgepeth, 215 F.3d at 612. The "predominant factor" in determining whether an assessment is a tax or a fee is "the revenue's ultimate use." Hedgepeth, 215 F.3d at 612. "Where the ultimate use is to provide a general public benefit, the assessment is likely a tax, while an assessment that provides a more narrow benefit...is likely a fee." Am. Landfill, 166 F.3d at 838 (internal citations omitted); see also Wenz, 392 F. Supp. 2d at 936. Simply because the tax at issue has been transformed into a debt for purposes of collection by virtue of State statute does not serve to transform the tax into a debt. See, e.g., Brown Bark I, L.P. v. Traverse City Light & Power Dept., 736 F. Supp. 2d 1099, 1113 (W.D. Mich. 2010) aff'd, 10-2644, 2012 WL 3871889 (6th Cir. 2012) (citing Levine v. Levine, 209 F.Supp. 564, 566-67 (D.Del.1962)).

Although Plaintiffs style their action as a discrimination suit under the ADA and §...