Opinion ID: 199835
Heading Depth: 2
Heading Rank: 2

Heading: Dismissal of Federal Claims Against Municipal Defendants

Text: 25 The district court dismissed without prejudice the claims against the municipal defendants on the basis that the claims were barred by the Tax Injunction Act and by principles of comity. 26
27 Our analysis of the district court's decision to dismiss this claim is governed by the standard laid down by the Supreme Court in the case of Fair Assessment in Real Estate Ass'n, Inc. v. McNary, 454 U.S. 100, 102 S.Ct. 177, 70 L.Ed.2d 271 (1981). Under that standard, Tomaiolo cannot obtain damages for the administration of a state tax system under § 1983, even though that administration may have violated federal law, so long as state law provides her a plain, complete, and adequate remedy. Id. at 116, 102 S.Ct. 177. Before we apply Fair Assessment 's standard, however, a brief discussion of the case and subsequent developments may clarify the relevant law. 28 The Tax Injunction Act of 1937 provides in its entirety: 29 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. 30 28 U.S.C. § 1341 (1994). The Act limits the jurisdiction of the federal courts, rather than merely restricting the remedies available in a given civil action. Trailer Marine Transport Corp. v. Rivera Vazquez, 977 F.2d 1, 4-5 (1st Cir.1992). 31 By its terms the Act applies to actions in which plaintiffs seek injunctions against state officers. The Supreme Court did not address the question whether the Act applies to actions in which plaintiffs seek damages until 1981. That year, in Fair Assessment, a group of property owners brought a suit for damages under § 1983, claiming that their county's tax assessors had denied them equal protection and deprived them of their property without due process of law by failing to reassess old properties in a timely fashion and by retaliating against those who successfully appealed property assessments. 454 U.S. at 105-06, 102 S.Ct. 177. In deciding the case, the Supreme Court stated that it would not rely on the Tax Injunction Act. Id. at 107, 102 S.Ct. 177. Instead, it held that the principle of comity between the federal and state governments — a principle embodied in, but not limited to, the Act — barred a federal court from considering the damages claim. Id. at 107, 116, 102 S.Ct. 177. 3 The Court said as well that the principle of comity would not apply to a case in which a state provided no plain, adequate, and complete remedy for violations of federal law in the tax collection process. Id. at 116, 102 S.Ct. 177. 4 32 The Court has since explained that what it did in Fair Assessment was to construe § 1983, in light of the principle of comity, to provide no cause of action for damages in state tax cases. In Lehman v. Lycoming County Children's Services Agency, 458 U.S. 502, 102 S.Ct. 3231, 73 L.Ed.2d 928 (1982), the Court noted that in Fair Assessment it had conclude[d] that 42 U.S.C. § 1983 does not confer jurisdiction on the federal courts to hear suits for tax refunds when state law provides an adequate remedy. Id. at 512 n. 16, 102 S.Ct. 3231. In National Private Truck Council, Inc. v. Oklahoma Tax Commission, 515 U.S. 582, 115 S.Ct. 2351, 132 L.Ed.2d 509 (1995), the Court stated that in Fair Assessment ... the principle of noninterference with state taxation led us to construe § 1983 narrowly. Id. at 589, 115 S.Ct. 2351. Most recently, in Quackenbush v. Allstate Insurance Co., 517 U.S. 706, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996), the Court observed that in National Private Truck Council it had indicated that Fair Assessment was a case about the scope of the § 1983 cause of action. Id. at 719, 116 S.Ct. 1712. Accordingly, it is clear that Fair Assessment applies to this case, because Tomaiolo is bringing a § 1983 action for damages suffered in the allegedly unlawful administration of a state tax system. It is less clear — as a matter of Supreme Court precedent — that the Tax Injunction Act itself applies. 5
33 We proceed to apply Fair Assessment to this case. If Tomaiolo is alleging that Rhode Island officials have administered the tax system of that state in violation of the federal Constitution, she may not bring a case in federal court so long as Rhode Island provides a remedy for such violations that is plain, adequate, and complete. 6 34 Tomaiolo's complaint, summarized above, demonstrates that she is indeed alleging that the administration of Rhode Island's tax system violated federal law. She responds, however, that she is not challenging the validity of applicable state law (§ 44-5-7), but is merely alleging that the municipal defendants, conspiring with the escrow defendants, misinterpreted that state law; that their misinterpretation put them in conflict with RESPA; 7 and that it also led to constitutional violations. A claim that a misinterpretation of state law led to violations of federal rights is still a claim that local officials broke federal law in interpreting and applying state law. Tomaiolo's argument amounts to a distinction without a difference. Moreover, if underlying her federal arguments is a fundamental assertion that defendants violated state law, all the more reason to defer to the state system to determine what state law means. 35 Tomaiolo does not seriously contest that Rhode Island provides a plain, adequate, and complete remedy through which taxpayers may contest their taxes and have their federal claims heard in state court. See, e.g., Oster v. Tellier, 544 A.2d 128, 132 (R.I.1988) (holding certain provisions of the Rhode Island tax code under R.I. Gen. Laws § 44 unconstitutional but declining to award rebate for failure of proof of an ascertainable amount of damages); see also Sterling Shoe Co. v. Norberg, 411 F.Supp. 128 (D.R.I.1976) ([P]laintiff's constitutional attack upon the adequacy of Rhode Island's statutory scheme to contest tax assessments is wholly insubstantial....). Tomaiolo offers nothing to contradict that conclusion. In fact, she filed an identical action in the Rhode Island Superior Court, which has effectively been stayed pending the outcome of this action. 36 She does raise two additional arguments, which we discuss briefly. First, she argues that the outcome we reach conflicts with the historical role of the federal courts as a forum for the enforcement of federal rights, citing cases such as Wright v. Roanoke Redevelopment & Housing Authority, 479 U.S. 418, 107 S.Ct. 766, 93 L.Ed.2d 781 (1987), in which the Court held that § 1983 provided a cause of action for residents of federally funded public housing against the local housing authority that administered their program. In Fair Assessment itself, the Court balanced the conceded interests of § 1983 plaintiffs in a federal forum against the interests of state and local defendants in the uninterrupted operation of their tax systems. 454 U.S. at 116, 102 S.Ct. 177 (noting that the Court reached its result despite the ready access to federal courts provided by Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961), and its progeny). Tomaiolo's argument has therefore already been taken into consideration in formulating the rule we apply. 37 Second, she argues that this case differs from Fair Assessment because in that case the alleged official misconduct was continuing, so that a federal court's damages award would in effect have halted it. In this case, she says, the alleged misconduct has ceased, so that federal intervention would operate only to cure the past wrong and not to affect the present operation of the system. We reject this argument because the procedure by which a state taxpayer may obtain a refund of an allegedly illegally collected tax is no less a part of the smooth functioning of the state's tax system than the collection of the taxes in the first place. Perhaps, as Tomaiolo maintains, the disruption we would cause by intervening would be less on the facts of this case. Any such difference would not be so great as to justify recognizing an exception to Fair Assessment along the lines she proposes. 38 Thus, we agree that the federal claims against the municipal defendants were properly dismissed under Fair Assessment. 39