Court Opinion

ID: 64163
Source: CourtListenerOpinion
Date Created: 2010-04-26 05:09:37+00
Date Added: 2024-06-11T17:20:27.518803
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                         November 7, 2008

                                       No. 08-40138                   Charles R. Fulbruge III
                                                                              Clerk

THAMES SHIPYARD & REPAIR CO, also known as
The Thames Shipyard & Repair Company

                                                  Plaintiff-Appellant
v.

GALVESTON CENTRAL APPRAISAL DISTRICT;
GALVESTON COUNTY APPRAISAL REVIEW BOARD

                                                  Defendants-Appellees

                   Appeal from the United States District Court
                        for the Southern District of Texas
                              USDC No. 3:07-CV-125

Before REAVLEY, CLEMENT, and PRADO, Circuit Judges.
PER CURIAM:*
       Plaintiff-Appellant Thames Shipyard & Repair Co. appeals the district
court’s dismissal of its case for want of subject matter jurisdiction. Plaintiff
contends that its suit to invalidate a state tax assessment on a dry dock does not
fall within the Tax Injunction Act, 28 U.S.C. § 1341, because its complaint does
not expressly seek injunctive or declaratory relief, the assessment was imposed

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
                                  No. 08-40138

before suit was filed, and the governmental entities named as defendants are not
responsible for assessing or collecting the tax.     We review de novo whether
§ 1341 prevented the district court from exercising jurisdiction over Plaintiff’s
suit. Washington v. Linebarger, Goggan, Blair, Pena & Sampson, LLP, 338 F.3d
442, 444 (5th Cir. 2003).
      The Tax Injunction Act states:
      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.
28 U.S.C. § 1341. This statute reflects “the fundamental principle of comity
between federal courts and state governments that is essential to ‘Our
Federalism,’ particularly in the area of state taxation.” Fair Assessment in Real
Estate Ass’n, Inc. v. McNary, 454 U.S. 100, 103, 102 S. Ct. 177, 179 (1981). Thus,
§ 1341 “imposes an equitable duty on federal district courts to refrain from
exercising jurisdiction over claims arising from state revenue collection except
when the remedies the state provides could prevent a taxpayer from asserting
a federal right.” McQueen v. Bullock, 907 F.2d 1544, 1547 (5th Cir. 1990)
(footnote omitted). This broad jurisdictional barrier applies equally to requests
for declaratory and injunctive relief. California v. Grace Brethren Church, 457
U.S. 393, 408-09, 102 S. Ct. 2498, 2507-08 (1982).
      We agree with the district court that Plaintiff’s suit to invalidate the
property tax assessment of the dry dock on federal constitutional and other
grounds, for which it seeks a judgment that “[t]he Dry Dock is not subject to
taxation in Galveston County, Texas,” is in substance a request for declaratory
relief barred by the Tax Injunction Act. We also reject as illusory the distinction
drawn by Plaintiff between its suit and one that directly attempts to restrain,
enjoin, or suspend the assessment or collection of tax. “[F]ederal courts must
guard against interpretations of the Tax Injunction Act which might defeat its

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purpose and text.” Arkansas v. Farm Credit Servs. of Cent. Ark., 520 U.S. 821,
827, 117 S. Ct. 1776, 1780 (1997). Under general tax principles, “an assessment
is closely tied to the collection of a tax,” in that it serves as “the official recording
of liability that triggers levy and collection efforts.” Hibbs v. Winn, 542 U.S. 88,
101, 124 S. Ct. 2276, 2285-86 (2004). A declaration that Plaintiff’s dry dock is
exempt from the assessed tax would necessarily preclude collection of that tax
by any arm of the State. Plaintiff’s effort to invalidate an assessment prior to its
actual collection by other state authorities therefore plainly interferes with the
State’s ability to collect taxes—precisely what the Tax Injunction Act prohibits.
      The cases cited by Plaintiff—Hibbs and Jefferson County v. Acker, 527 U.S.
423, 433, 119 S. Ct. 2069, 2076 (1999)—are inapposite. Hibbs held that the Act
does not bar a suit prospectively to enjoin the granting of state tax credits to
third parties. 542 U.S. at 95-96, 124 S. Ct. at 2282-83 (affirming the appeals
court’s ruling that the Act does not prohibit an Establishment Clause challenge
in federal court to tax credits granted to third parties who donated money to
organizations that provided scholarships for private religious secondary schools).
Here, Plaintiff filed suit in a federal forum to avoid paying its own tax bill, not
to invalidate tax benefits accorded to third parties. Nor is this a state-initiated
tax collection suit in which a defendant taxpayer may properly seek to invalidate
the tax, as held in Jefferson County. 527 U.S. 423, 443-45, 119 S. Ct. 2069, 2076-
77 (holding a tax-collection suit initiated by the State does not “restrain” state
action within the meaning of the Act, and in such a suit the taxpayer may assert
defenses to the validity of the tax). To the contrary, both Hibbs and Jefferson
County recognize that the Tax Injunction Act squarely bars an anticipatory
federal suit such as Plaintiff’s to prevent the collection of tax by the State. See
Hibbs, 542 U.S. at 106, 124 S. Ct. at 2288 (characterizing a taxpayer’s federal
suit to avoid paying its own taxes as one that “fall[s] within § 1341’s undisputed
compass”); Jefferson County, 527 U.S. at 433, 119 S. Ct. at 2076 (“By its terms,

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the Act bars anticipatory relief, suits to stop (‘enjoin, suspend or restrain’) the
collection of taxes.”).
      Finally, Plaintiff does not contend that Texas law fails to provide a “plain,
speedy, and efficient remedy” for pressing its federal due process and commerce
clause claims, and, notably, this Court has acknowledged that Texas courts
provide adequate remedies for claims similar to those asserted here.
See McQueen, 907 F.2d at 1547-48 & n.9. In fact, Plaintiff has already brought
an identical suit in state court.
      Accordingly, the district court did not err in concluding that the Tax
Injunction Act precludes federal jurisdiction over Plaintiff’s suit.
      AFFIRMED.

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