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Side by Side Redevelopment, Inc. v. City of New Orleans

United States District Court, E.D. Louisiana

June 13, 2019


         SECTION M (4)

          ORDER & REASONS


         Defendants the City of New Orleans (“City”); Julius Nunn, in his official capacity as chief of the Bureau of Treasury for the City of New Orleans (“Nunn”); Norman White, in his official capacity as ex officio tax collector for the City of New Orleans (“White”); and Errol G. Williams, in his official capacity as assessor for Orleans Parish (collectively “Defendants”) move this Court to dismiss the complaint filed by plaintiffs Side by Side Redevelopment, Inc. (“SBS”) and 2323 Iberville, Inc. (“2323 Iberville”) (collectively “Plaintiffs”).[1] Having considered the parties' memoranda and the applicable law, the Court finds that it does not have jurisdiction over this suit by operation of the Tax Injunction Act, 28 U.S.C. § 1341.[2]

         I. BACKGROUND

         This case concerns a property tax dispute. Plaintiffs filed the instant petition for a writ of mandamus and complaint alleging that the City's administration of the ad valorem property tax system, including its processing of tax-exempt forms, is unconstitutional in that it deprives citizens of due process.[3] Plaintiffs allege that SBS acquired immovable property located at 2323 Iberville Street, New Orleans, Louisiana (“the Property”), at a tax sale in 2004, and subsequently transferred the Property to 2323 Iberville by a quit claim deed on March 4, 2015.[4] Plaintiffs claim that SBS filed yearly requests with the City to obtain non-profit tax-exempt status for all of their properties, but the City and tax assessor failed to timely act on those applications and continued to impose ad valorem taxes, interest, penalties, and tax liens on the properties.[5] In 2012 and 2015, SBS filed successful appeals with the Louisiana Tax Commission to lower the assessed value of the Property.[6] Plaintiffs allege, however, that the City continued to assess taxes on the Property at a higher property value, sent related tax bills to the wrong person, and continually failed to act on the tax-exempt applications.[7]

         On April 18, 2017, 2323 Iberville sold the Property to Giles Bettison Design, LLC.[8] At the time of the sale, funds were placed in escrow with the closing attorney to cover the disputed property taxes.[9] Plaintiffs allege that they have met with representatives of the assessor's office on multiple occasions and were successful in getting the Property's assessed value lowered in accordance with the Louisiana Tax Commission's orders and having the interest and penalties forgiven.[10] However, Plaintiffs allege that the City's treasury department refused to issue an amended tax bill, and advised them that they have to pay the full amount of the disputed past-due tax bill and then seek a refund for the overpayment.[11]

         Dissatisfied with this result, Plaintiffs filed the instant suit seeking a writ of mandamus compelling the City to act upon their requests for tax-exempt status, issue an amended tax bill, and change the addresses on the tax bills to reflect the current property owners.[12] Plaintiffs also seek costs, fees, and other damages.[13]

         II. LAW & ANALYSIS

         A. Rule 12(b)(1) Standard

         Rule 12(b)(1) of the Federal Rules of Civil Procedure permits a party to challenge a court's subject-matter jurisdiction. “[A] claim is ‘properly dismissed for lack of subject-matter jurisdiction when the court lacks the statutory authority or constitutional power to adjudicate' the claim.” Griener v. United States, 900 F.3d 700, 703 (5th Cir. 2018) (quoting In re FEMA Trailer Formaldehyde Prod. Liab. Litig., 668 F.3d 281, 286 (5th Cir. 2012)). The party asserting jurisdiction bears the burden of proving that subject-matter jurisdiction exists. Id. “Lack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.” Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001). “A motion to dismiss for lack of subject-matter jurisdiction should be granted only if it appears certain that the plaintiff cannot prove any set of facts in support of his claims entitling him to relief.” Sureshot Golf Ventures, Inc. v. Topgolf Int'l, Inc., 754 Fed.Appx. 235, 235 (5th Cir. 2018) (citing Wagstaff v. U.S. Dep't of Educ., 509 F.3d 661, 663 (5th Cir. 2007)).

         B. Tax Injunction Act

         The Tax Injunction Act provides that “[t]he 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. The Fifth Circuit has held that “[s]ection 1341 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.'” Washington v. New Orleans City, 424 Fed.Appx. 307, 309-10 (5th Cir. 2011) (quoting Fair Assessment in Real Estate Ass'n, Inc. v. McNary, 454 U.S. 100, 103 (1981)). “Embodied within the statute is the duty of federal courts to withhold relief when a state legislature has provided an adequate scheme whereby a taxpayer may maintain a suit to challenge a state tax.” Home Builders Ass'n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998) (internal quotation marks and citation omitted). “In short, ‘the Tax Injunction Act is a broad jurisdictional impediment to federal court interference with the administration of state tax systems.'” ANR Pipeline Co. v. Louisiana Tax Comm'n, 646 F.3d 940, 946 (5th Cir. 2011) (quoting Home Builders Ass'n, 143 F.3d at 1010).

         Plaintiffs argue that the Tax Injunction Act does not apply because they do not seek to avoid paying the taxes, but instead, seek action on their tax-exempt status applications and a ruling that the proper amount of taxes be determined in accordance with the value assessed by the Louisiana Tax Commission, not the assessor's office.[14] Plaintiffs further argue that the City's current method of processing tax-related matters is so inefficient and disorganized that it does not provide an adequate remedy.[15]

         Plaintiffs' argument is unpersuasive on several levels. First, Plaintiffs do seek to avoid paying what they describe as the “exorbitant amount of taxes” billed to them.[16] This reality undermines at the outset ...

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