Court Opinion

ID: 2995106
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:18:28.098195+00
Date Added: 2024-06-11T11:45:23.822671
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

No. 00-1236

James A. Wright,

Plaintiff-Appellant,

v.

Maria Pappas, individually and in her official
capacity as Treasurer of Cook County, Illinois,

Defendant-Appellee.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 C 1998--William J. Hibbler, Judge.

Submitted February 22, 2001--Decided July 5, 2001

  Before Bauer, Cudahy, and Posner, Circuit
Judges.

  Posner, Circuit Judge. James Wright, who
is black, brought this civil rights suit
(see 42 U.S.C. sec. 1983) against the
treasurer of Cook County, in both her
individual and her official capacity,
charging racial discrimination and
seeking monetary relief. The suit arises
out of the County’s "annual tax lien
sale." See 35 ILCS 200/21. If a property
owner is delinquent on his county taxes,
the County acquires by operation of law a
lien on the property and can ask a state
court for a judgment ordering that the
property be sold to satisfy the lien. If
such a judgment is entered, the county
treasurer sells the tax lien at an
auction and the buyer obtains a
certificate of purchase which, upon the
property owner’s failing to redeem his
property by reimbursing the buyer of the
lien, can be converted to a tax deed,
giving the buyer title to the property.
Wright obtained certificates of purchase
of 13 properties in the 1998 tax lien
sale, and he argues that the defendant,
because of Wright’s race, misrepresented
the value of the properties. He asks that
she be ordered to refund him the price he
paid for the certificates.

  The district court dismissed the suit as
barred by the Tax Injunction Act, 28
U.S.C. sec. 1341, which withdraws from
the federal courts jurisdiction to
"enjoin, suspend or restrain the
assessment, levy or collection" of state
taxes (including local taxes, Platteville
Area Apartment Ass’n v. City of
Platteville, 179 F.3d 574, 582 (7th Cir.
1999); Hager v. City of West Peoria, 84
F.3d 865, 868 n. 1 (7th Cir. 1996); Folio
v. City of Clarksburg, 134 F.3d 1211,
1214 (4th Cir. 1998)) unless the taxpayer
lacks an adequate state remedy. See In re
Stoecker, 179 F.3d 546, 549 (7th Cir.
1999), aff’d under the name Raleigh v.
Illinois Dept. of Revenue, 530 U.S. 15
(2000). The Act is a gesture of comity
toward the states; recognizing the
centrality of tax collection to the
operation of government, the Act prevents
taxpayers from running to federal court
to stymie the collection of state taxes.
E.g., RTC Commercial Assets Trust 1995-
NP3-1 v. Phoenix Bond & Indemnity Co.,
169 F.3d 448, 453 (7th Cir. 1999). The
Act’s goal could not be achieved if the
statutory language were read literally,
as barring only injunctions, and so it’s
been stretched to cover declaratory
judgments, California v. Grace Brethren
Church, 457 U.S. 393, 408-13 (1982), and,
what is as necessary to prevent the Act
from being completely undone, suits for
refund of state taxes. Marvin F. Poer &
Co. v. Counties of Alameda, 725 F.2d 1234
(9th Cir. 1984); Cities Service Gas Co.
v. Oklahoma Tax Comm’n, 656 F.2d 584, 586
(10th Cir. 1981); United Gas Pipe Line
Co. v. Whitman, 595 F.2d 323 (5th Cir.
1979). It is an open question whether the
Act covers damages suits under 42 U.S.C.
sec. 1983 as well, see Fair Assessment in
Real Estate Ass’n v. McNary, 454 U.S.
100, 107 (1981), which would be another
method of making an end run around the
statutory prohibition. The Supreme Court
held in the Fair Assessment case that
such a suit was in any event barred by
the principle of comity, operating
independently of the Tax Injunction Act.
The Court declined to rule on whether
that principle "would also bar a claim
under sec. 1983 which requires no
scrutiny whatever of state tax assessment
practices, such as a facial attack on tax
laws colorably claimed to be
discriminatory as to race." Id. at 107 n.
4.

  A lien sale is a mode of tax collection;
and so an action to enjoin it, or declare
it illegal, or rescind it, or perhaps
even just obtain damages on the ground of
its illegality, would be barred by the
Act or, in the case of the damages suit,
by the free-standing principle of comity.
RTC Commercial Assets Trust 1995-NP3-1 v.
Phoenix Bond & Indemnity Co., supra;
Simon v. Cebrick, 53 F.3d 17, 22 (3d Cir.
1995); Dawson v. Childs, 665 F.2d 705,
710 (5th Cir. 1982). Wright doesn’t
challenge the assessment of county taxes
that led to the sale of tax liens, but he
does challenge the mode of collection
(and remember that the Act applies to
collection as well as assessment) and he
seeks, in effect, a refund of state
taxes. We say "in effect" because of
course he is not the delinquent taxpayer.
But he stepped into the
delinquenttaxpayer’s shoes, paid the
taxes due on the delinquent’s property,
and now wants his payment back. If he
succeeds in the suit, and if we set aside
the unreality of supposing that the
Treasurer of Cook County is going to dig
into her own pockets to pay the judgment,
the collection of taxes on the 13
properties that Wright obtained
certificates of purchase for will be
thwarted, or at least delayed, as the
Treasurer searches for another buyer of
the tax liens on those properties. The
suit thus is governed by Fair Assessment,
and it does not fall within the possible
exception for "facial challenges."
Alternatively, it is (most clearly with
respect to the claim against the
Treasurer in her official capacity, a
claim squarely against the taxing
authority itself) comfortably within the
prohibition of the Tax Injunction Act.
  But before wrapping up we should
consider the possible bearing of the
superficially similar case of Pendleton
v. Heard, 824 F.2d 448, 451-52 (5th Cir.
1987), a suit under the Voting Rights Act
to enjoin the issuance of certain county
bonds because the question whether to
issue them had not been submitted for
approval to the electorate, as the plain
tiffs contended the Voting Rights Act
required. The issuance of the bonds would
by operation of law have imposed a lien
and tax obligation on all the taxable
property in the county, to assure the
repayment of the bonds. The court held
that the injunction was not barred by the
Tax Injunction Act, because, even if the
bond issue itself was deemed a method of
assessing or collecting taxes--an issue
the court left open--the plaintiffs were
not complaining about the bond issue, but
only about the failure of the county to
submit it to the electorate for approval.
The reasoning-- rejected in Kerns v.
Dukes, 153 F.3d 96, 102-03 and n. 10 (3d
Cir. 1998), and Jerron West, Inc. v.
California State Bd. of Equalization, 129
F.3d 1334, 1337-38 (9th Cir. 1998)--is
questionable, though the result is sound
because a bond issue is not a tax, even
though, like many other fiscal decisions
by public bodies, it has tax
implications. Since states and local
governments are forbidden to issue money,
their ability to borrow, whether by
issuing bonds or otherwise, depends on
their commitment to use their taxing
power to repay the lender. But that
doesn’t turn borrowing into taxing, or
the issuance of a bond into the
assessment, levy, or collection of a tax.
Wright, however, is contesting the
collection of a tax and seeking in effect
a tax refund, and his suit is therefore
barred.

Affirmed.