Opinion ID: 532040
Heading Depth: 2
Heading Rank: 2

Heading: Tax Injunction Act and Principle of Comity

Text: 10 The Tax Injunction Act severely limits the power of federal courts to interfere with state taxation proceedings. It provides: 11 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. 12 28 U.S.C. Sec. 1341. This provision has its roots in equity practice, in principles of federalism, and in recognition of the imperative need of a State to administer its own fiscal operations. Tully v. Griffin, Inc., 429 U.S. 68, 73, 97 S.Ct. 219, 222, 50 L.Ed.2d 227 (1976). Its principal purpose is to limit drastically federal-court interference with local tax matters. Rosewell v. LaSalle National Bank, 450 U.S. 503, 522, 101 S.Ct. 1221, 1233, 67 L.Ed.2d 464 (1981). 13 While it is the Tax Injunction Act that prevents federal courts from giving injunctive relief, see generally Rosewell, 450 U.S. 503, 101 S.Ct. 1221, or declaratory relief, California v. Grace Brethren Church, 457 U.S. 393, 408-11, 102 S.Ct. 2498, 2507-09, 73 L.Ed.2d 93 (1982), as long as there is a plain, speedy and efficient remedy in state court, it is the principle of comity that prevents a taxpayer from seeking damages in a Sec. 1983 action if a plain, adequate, and complete remedy may be had in state court. Fair Assessment in Real Estate Association v. McNary, 454 U.S. 100, 116, 102 S.Ct. 177, 186, 70 L.Ed.2d 271 (1981). There is no significant difference between the plain, speedy and efficient standard set forth in the Tax Injunction Act and the plain, adequate, and complete standard governing comity. Fair Assessment, 454 U.S. at 116 n. 8, 102 S.Ct. at 186 n. 8. Both phrases refer to the obvious precept that plaintiffs seeking protection of federal rights in federal courts should be remitted to their state remedies if their federal rights will not thereby be lost. Id.; accord In re Gillis, 836 F.2d 1001, 1009-10 & n. 7 (6th Cir.1988); 423 South Salina Street, Inc. v. City of Syracuse, 566 F.Supp. 484, 490 & n. 6 (N.D.N.Y.), aff'd, 724 F.2d 26, 27 (2d Cir.1983) (per curiam). Cf. Rosewell, 450 U.S. at 524-27, 101 S.Ct. at 1234-36. 14 A state remedy is plain, speedy and efficient if it is procedurally adequate. Rosewell, 450 U.S. at 512, 101 S.Ct. at 1228 (state remedy must meet minimal procedural criteria (emphasis in original)). A state need only provide a  'full hearing and judicial determination' at which [a taxpayer] may raise any and all constitutional objections to the tax. Id. at 514, 515 n. 19, 101 S.Ct. at 1229, 1230 n. 19 (quoting LaSalle National Bank v. County of Cook, 57 Ill.2d 318, 324, 312 N.E.2d 252, 255-56 (1974)). 15 Because New York provides several remedies which afford LILCO an opportunity to raise all constitutional objections to the real property taxes imposed, both comity and the Tax Injunction Act bar access to federal court. 16 First, LILCO may, in a declaratory judgment action under New York C.P.L.R. Sec. 3001 and New York Gen. Mun. Law Sec. 51, assert its challenges to the constitutionality of the assessor's methodology. See, e.g., Bloom v. Mayor of City of New York, 35 A.D.2d 92, 312 N.Y.S.2d 912, 916-17 (2d Dep't 1970), aff'd, 28 N.Y.2d 952, 323 N.Y.S.2d 436, 271 N.E.2d 919 (1971); C.H.O.B. Associates, Inc. v. Board of Assessors of County of Nassau, 45 Misc.2d 184, 257 N.Y.S.2d 31, 35-36 (Sup.Ct. Nassau Co.), aff'd, 22 A.D.2d 1015, 256 N.Y.S.2d 550 (2d Dep't 1964), aff'd, 16 N.Y.2d 779, 262 N.Y.S.2d 501 (1965); Zinder v. Board of Assessors of County of Nassau, 66 Misc.2d 150, 320 N.Y.S.2d 594, 595-96 (Sup.Ct. Nassau Co.1971), aff'd, 38 A.D.2d 836, 329 N.Y.S.2d 1017 (2d Dep't 1972). Moreover, LILCO may prosecute its declaratory judgment action concurrently with its pending article 7 proceedings that attack the validity of its assessments. New York Public Interest Research Group, Inc. v. Board of Assessment Review of City of Albany, 104 Misc.2d 128, 427 N.Y.S.2d 665, 669 (Sup.Ct. Albany Co.1979). 17 LILCO argues that although the declaratory judgment action may be available, it is procedurally inadequate because in such an action no inquiry into the assessor's mental processes, judgments, and observations would be permitted. Therefore, LILCO contends, it would be precluded from proving a necessary element of its equal protection claim: intent to classify in violation of state law. This contention is baseless. 18 It is, of course, true that evidence of the mental processes of the assessor may not be adduced in a declaratory judgment action. See, e.g., C.H.O.B. Associates, 257 N.Y.S.2d at 34-35; Zinder, 320 N.Y.S.2d at 596. Such evidence, however, is unnecessary to LILCO's claim that the assessment method violates the equal protection clause. While proof of an intent to discriminate has been required in other types of situations, see, e.g., Village of Arlington Heights v. Metropolitan Development Corp., 429 U.S. 252, 264-65, 97 S.Ct. 555, 562-63, 50 L.Ed.2d 450 (1977) (housing discrimination); Keyes v. School District No. 1, 413 U.S. 189, 198, 93 S.Ct. 2686, 2692, 37 L.Ed.2d 548 (1973) (school desegregation); see also generally Washington v. Davis, 426 U.S. 229, 239-43, 96 S.Ct. 2040, 2047-49, 48 L.Ed.2d 597 (1976), in the context of real property tax assessments, evidence of the assessor's mental processes need not be proved. 19 The requisite unlawful intent follows from proof of a systematic overassessment over time of certain properties as compared to other similarly situated properties within the taxing district; indeed, absent proof of such an inequitable impact of the assessor's methods, LILCO could not succeed on its equal protection claim. See, e.g., Allegheny Pittsburgh Coal Co. v. County Commission of Webster County, --- U.S. ----, 109 S.Ct. 633, 639, 102 L.Ed.2d 688 (1989) (the fairness of one's allocable share of the total property tax burden can only be meaningfully evaluated by comparison with the share of others similarly situated   . The relative undervaluation of comparable property    over time therefore denies    [a party] equal protection of law.); see also Snowden v. Hughes, 321 U.S. 1, 9, 64 S.Ct. 397, 401, 88 L.Ed. 497 (1944) (purposeful discrimination    may be evidenced, for example, by a systematic under-valuation of the property of some taxpayers and a systematic over-valuation of the property of others, so that the practical effect of the official breach is the same as though the discrimination were incorporated in and proclaimed by the statute). 20 Intentional discrimination also follows from evidence that the assessing authority repeatedly applied greatly disparate assessment ratios to similarly situated properties in violation of state law. Louisville & Nashville Railroad Co. v. Public Service Commission of Tennessee, 249 F.Supp. 894, 899-902 (M.D. Tenn.1966), aff'd, 389 F.2d 247 (6th Cir.1968). Thus, because proof that the assessment method results in disparate treatment of similarly situated taxpayers is all that is required for LILCO to succeed in a declaratory judgment action on its equal protection claim, see Allegheny Pittsburgh, 109 S.Ct. at 639; Louisville & Nashville Railroad, 249 F.Supp. at 899-902, and because such proof not only may be presented, but is essential to success in such an action, the issue of subjective intent as a separate inquiry simply evaporates. Notwithstanding New York's rule against questioning assessors about their subjective attitudes, therefore, New York's declaratory judgment remedy is adequate for purposes of comity and the Tax Injunction Act. 21 A second procedurally adequate remedy in which LILCO might attack the constitutionality of the assessment methodology would be a Sec. 1983 action in state court. See Fair Assessment, 454 U.S. at 116-17, 102 S.Ct. at 186-87 (the availability of a state-court Sec. 1983 action strongly supports the withholding of federal jurisdiction); accord Brooks v. Nance, 801 F.2d 1237, 1240 (10th Cir.1986); Miller v. City of Los Angeles, 55 F.2d 1390, 1391 (9th Cir.), cert. denied, 474 U.S. 995, 106 S.Ct. 408, 88 L.Ed.2d 359 (1985); 423 South Salina Street, 566 F.Supp. at 492. 22 Finally, we are not persuaded that even the pending article 7 tax certiorari proceedings are procedurally inadequate. Only three of LILCO's numerous assertions of procedural inadequacy with respect to the article 7 proceedings are worthy of discussion. First, although methods of proof are limited in the article 7 proceeding, see N.Y. Real Prop. Tax Law Sec. 720(3) (McKinney 1984 & Supp.1989), the permitted stratified, random-sample method of proof, under which LILCO may seek to establish the assessment ratio applied to its property as well as the ratio applied to all other property in the taxing district, would allow LILCO to establish that its property is overassessed relative to other property in the taxing district, and evidence of greatly disparate assessment ratios applied over time is sufficient to prevail on an equal protection claim. See Allegheny Pittsburgh, 109 S.Ct. at 639; Louisville & Nashville Railroad, 249 F.Supp. at 899-902. 23 Slightly more troublesome is LILCO's second claim that the article 7 proceedings, the earliest of which have lingered over ten years in pretrial proceedings, are simply not speedy. While we have some concern over any proceeding that takes over ten years to come to trial, the delay in these proceedings appears to arise less from the inadequacy of the proceeding itself than from a combination of problems of state-court administration and the considerable tactical maneuverings engaged in by both LILCO and defendants. Indeed, LILCO concedes that it consented to some of the adjournments granted to defendants. On this record, we conclude that the delays, albeit lengthy, do not yet establish any procedural inadequacy in these article 7 proceedings. 24 Finally, we reject LILCO's claim that the mere availability of the automatic stay provision of New York C.P.L.R. Sec. 5519(a)(1), which automatically stays any judgment or order when a political subdivision serves a notice of appeal, see New York C.P.L.R. Sec. 5519(a)(1) (McKinney 1978 & Supp.1989), renders all state-court remedies per se inadequate because not speedy. Section 5519(a)(1) is little more than a presumption that a political subdivision is entitled to a stay. It permits the stay to be vacated, limited, or modified by the court to which the appeal is taken. Further, a common balance to a stay pending appeal is to expedite the appeal, relief which the record indicates has been granted at least once in this controversy. In short, the mere availability of the statutory stay does not render all state-court actions inadequate.