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Monday, September 12, 2011

RealEstateDiscrimination 27-cv-26849_TaxCourt


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1. 27-CV-10-26849
Abstract: Class action, discrimination, equal protection, due process, motion to dismiss. STATE OF MINNESOTA TAX COURT FOURTH JUDICIAL DISTRICT COUNTY OF HENNEPIN REGULAR DIVISION Idowu Odunlade, Jose Llangari and Andrea Kral, on behalf of themselves and all other similarly situated, Petitioners, ORDER vs. File No




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E OF MINNESOTA TAX COURT


FOURTH JUDICIAL DISTRICT



COUNTY OF HENNEPIN REGULAR DIVISION






































Idowu Odunlade, Jose Llangari and Andrea Kral, on behalf of themselves and all other similarly situated,



Petitioners,


ORDER





vs.



File No.


27-CV-10-26849




City of Minneapolis, City of Minneapolis Assessor’s Office, City of Minneapolis Assessor Patrick J. Todd, in his personal capacity, County of Hennepin, Hennepin County Assessor’s Office, Hennepin County Assessor James R. Atchison, in his personal capacity,





Dated: August 31, 2011



Respondents.






The Honorable Sheryl A. Ramstad, Judge of the Minnesota Tax Court, heard this matter on August 25, 2011, at Courtroom 310, Minneapolis City Hall, Minneapolis, Minnesota.


David L. Wilson, Attorney at Law, Wilson Law Group, and Michael D. Gavigan, John E. Braun, Jonathon Moore, and Katherine Pasker, Student Attorneys under the Senior Practice Rule, represented Petitioners.


Mark Chapin, Deputy County Attorney and Lisa Hahn-Cordes, Assistant Hennepin County Attorney, represented the Respondents Hennepin County, Hennepin County Assessor’s Office, and County Assessor James R. Atchison. Deputy City Attorney Peter Ginder, Assistant City Attorneys James Moore, Amanda Trelstad and Gregory Sautter represented the Respondents City of Minneapolis, the City of Minneapolis Assessor’s Office and City of Minneapolis Assessor Patrick J. Todd.


The Court, upon all of the files, records and proceedings herein, now makes the following:


ORDER


1. The Motion for Judgment on the Pleadings brought on behalf of the County of Hennepin, Hennepin County Assessor’s Office, and Hennepin County Assessor James R. Atchison is granted with respect to the allegations against them set forth in Counts 1, 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, and 30.



2. Hennepin County shall be dismissed from this action.



3. The Motion to Dismiss brought on behalf of the City of Minneapolis, City of Minneapolis Assessor’s Office, and City of Minneapolis Assessor Patrick J. Todd is granted with respect to the allegations against them set forth in Counts 1, 2, 3, 4, 5, 8, 9, 11, 13, 14, 15, 16, 17, 21, 22, 24, 26, 27, 28, and 30.



4. The City of Minneapolis shall be dismissed from this action.



IT IS SO ORDERED. LET JUDGMENT BE ENTERED ACCORDINGLY. A STAY OF FIFTEEN DAYS IS HEREBY ORDERED. THIS IS A FINAL ORDER.




























BY THE COURT,









Sheryl A. Ramstad, Judge


MINNESOTA TAX COURT



DATED: August 31, 2011





Memorandum


Background



Idowu Odunlade, Jose Llangari and Andrea Karl, on behalf of themselves



and all others similarly situated (“Petitioners”), filed a Complaint in District Court



on November 19, 2010, alleging that City of Minneapolis, City of Minneapolis



Assessor’s Office, and City of Minneapolis Assessor Patrick J. Todd (“the City



Respondents”) and Hennepin County, Hennepin County Assessor’s Office, and



Hennepin County Assessor James R. Atchison (“the County Respondents”)



discriminated against them and others similarly situated in the Camden, Near



North Minneapolis, and the Phillips communities in making property tax



assessments. They allege that their property taxes have been unfairly high due



to incorrect or inaccurate valuations of their real property. The claims are



premised upon their belief that the tax assessment and methodology used by



both the City and the County are flawed and resulted in discriminatory



treatment. In response, the County Respondents filed a Motion to Transfer the



case to the Tax Court. The City Respondents also supported that Motion.



By Order of Hennepin County District Court Judge Joseph R. Klein dated



March 4, 2011, the Motion to Transfer to Tax Court was granted. [1]The County



Respondents now brings a Motion for Judgment on the Pleadings based upon



Petitioners’ failure to state a claim upon which relief can be granted, and the City



Respondents have filed a Motion to Dismiss Plaintiff’s Amended Complaint



pursuant to Minnesota Rules of Civil Procedure, Rule 12.02.




The Amended Complaint



In their 75-page Amended Complaint dated December 2, 2010, Petitioners



seek relief under both state and federal law for alleged improper assessments



of their properties and those of other, as yet unidentified, property owners in their



respective neighborhoods. The following paragraphs summarize the 30 counts



set forth in Petitioners’ Amended Complaint:



Count 1 seeks declaratory judgment and alleges a violation of the U.S.



Constitution Amendment XIV, Equal Protection Clause by the County Assessor,



in concert with the City Assessor, in the assessment of residential real property in



the City of Minneapolis for taxes payable in 2009.



Count 2 alleges a 42 USC § 1983 claim against all County and City



Respondents for violating the Equal Protection Clause in the assessment of



residential real property in the City of Minneapolis for taxes payable in 2009.



Count 3 alleges a violation of Minnesota Constitution Art. I, §§ 2 and 16



(Minnesota Equal Protection Clause) by all County and City Respondents in the



assessment of residential real property in the City of Minneapolis for taxes



payable in 2009.



Count 4 seeks declaratory judgment and alleges the City violated the U.S.



Constitution, Amendment XIV (procedural due process) in the valuation and



classification of residential property owners in the City of Minneapolis.



Count 5 seeks declaratory judgment and alleges the County violated the



U.S. Constitution, Amendment XIV (procedural due process) through the form of



the Truth-in-Taxation Statement issued to residential property owners in the City



of Minneapolis for taxes payable in 2009.



Count 6 alleges a 42 USC § 1983 claim against the County for violating



the U.S. Due Process Clause based on the form of the Truth-in-Taxation



Statement issued to residential property owners in the City of Minneapolis for



taxes payable in 2009.



Count 7 alleges the County violated the Minnesota Constitution Art. 1,



§ 8 Due Process Clause based upon the form of the Truth-in-Taxation



Statement issued to residential property owners in the City of Minneapolis for



taxes payable in 2009.



Count 8 seeks declaratory judgment and alleges all County and City



Respondents violated the Minnesota Constitution, Art. X, § 1, Uniformity in



Taxation, in the assessment of residential real property in the City of Minneapolis



for taxes payable in 2009.



Count 9 alleges all County and City Respondents violated the Minnesota



Constitution, Art. X, § 1, Uniformity in Taxation, in the assessment of



residential real property in the City of Minneapolis for taxes payable in 2009.



Count 10 seeks declaratory judgment and alleges a violation of Minn.



Stat. § 273.061, subd. 8 (1) by the County in the assessment of residential real



property in the City of Minneapolis for taxes payable in 2009.



Count 11 seeks declaratory judgment and alleges a violation of Minn.



Stat. § 273.11 against all County and City Respondents in the assessment of



residential real property in the City of Minneapolis for taxes payable in 2009.



Count 12 alleges a violation of Minn. Stat. § 273.061, subd. 8 (1) by the



County in the assessment of residential real property in the City of Minneapolis



for taxes payable in 2009.



Count 13 alleges a violation of Minn. Stat. § 273.11 by all County and City



Respondents in the assessment of residential real property in the City of



Minneapolis for taxes payable in 2009.



Count 14 seeks declaratory judgment and alleges a violation of the U.S.



Equal Protection Clause by the County Assessor, in concert with the City



Assessor in the assessment of residential real property in the City of Minneapolis



for taxes payable in 2010.



Count 15 alleges a 42 USC § 1983 claim against all County and City



Respondents for violated the U.S. Equal Protection Clause in the assessment of



residential real property in the City of Minneapolis for taxes payable in 2010.



Count 16 alleges a violation of the MN Equal Protection Clause by all



County and City Respondents in the assessment of residential real property in



the City of Minneapolis for taxes payable in 2010.



Count 17 seeks declaratory judgment and alleges the City violated the



U.S. Constitution Due Process Clause in the valuation and classification of



residential real property in the City of Minneapolis for taxes payable in 2010.



Count 18 seeks declaratory judgment and alleges the County violated the



U.S. Due Process Clause through the form of the Truth-in-Taxation Statement



issued to residential property owners in the City of Minneapolis for taxes payable



in 2010.



Count 19 alleges a 42 USC § 1983 claim against the County for violating



the U.S. Due Process Clause based upon the form of the Truth-in-Taxation



Statement issued to residential property owners in the City of Minneapolis for



taxes payable in 2010.



Count 20 alleges the County violated the Minnesota Due Process Clause



based on the form of the Truth-in-Taxation Statement issued to residential



property owners in the City of Minneapolis for taxes payable in 2010.



Count 21 seeks declaratory judgment and alleges all County and City



Respondents violated the Minnesota Constitution, Art. X, §1, Uniformity in



Taxation, in the assessment of residential real property in the City of Minneapolis



for taxes payable in 2010.



Count 22 alleges all County and City Respondents violated the Minnesota



Constitution, Art. X, § 1, Uniformity in Taxation, in the assessment of



residential real property in the City of Minneapolis for taxes payable in 2010.



Count 23 seeks declaratory judgment and alleges a violation of Minn.



Stat. § 273.061, subd. 8 (1) by the County in the assessment of residential real



property in the City of Minneapolis for taxes payable in 2010.



Count 24 seeks declaratory judgment and alleges a violation of Minn.



Stat. § 273.11 against all County and City Respondents in the assessment of



residential real property in the City of Minneapolis for taxes payable in 2010.



Count 25 alleges a violation of Minn. Stat. § 273.061, subd. 8 (1) by the



County in the assessment of residential real property in the City of Minneapolis



for taxes payable in 2010.



Count 26 alleges a violation of Minn. Stat. § 273.11 by all County and City



Respondents in the assessment of residential real property in the City of



Minneapolis for taxes payable in 2010.



Count 27 seeks declaratory judgment and alleges a violation of the U.S.



Equal Protection Clause by the County Assessor, in concert with the City



Assessor, in the assessment of residential real property in the City of



Minneapolis for taxes payable in 2011.



Count 28 seeks declaratory judgment and alleges all County and City



Respondents violated the Minnesota Constitution, Art. X, §1, Uniformity in



Taxation, in the assessment of residential real property in the City of Minneapolis



for taxes payable in 2011.



Count 29 seeks declaratory judgment and alleges a violation of Minn.



Stat. § 273.061, subd. 8(1) by the County in the assessment of residential real



property in the City of Minneapolis for taxes payable in 2011.



Count 30 seeks declaratory judgment and alleges a violation of Minn.



Stat. § 273.11 against all County and City Respondents in the assessment of



residential real property in the City of Minneapolis for taxes payable in 2011.



To summarize, Counts 1, 2, 3, 8, 9, 10, 11, 12, 13, 14, 15, 16, 21, 22, 23,



24, 25, 26, 27, 28, 29, and 30 are claims which have an underlying basis in the



assessment of residential property in the City of Minneapolis, while Counts 5, 6,



7, 18, 19, and 20 are claims which have an underlying basis in the Truth-in-



Taxation Statement issued to residential property owners in the City of



Minneapolis. Counts 4 and 17 allege that the City’s Notice of Valuation and



Classification violated Petitioner’s due process rights.



Facts



The following facts are not in dispute:



1. Each of the named Petitioners owns residential property in Hennepin



County.



2. Petitioners assert their properties have been overvalued for purposes



of property taxation. Specifically, Petitioners claim that Respondents



assessed their properties at inflated values compared to the properties’



market values and seek a systematic reassessment of all residential



property in the communities for the tax assessment years 2008, 2009,



and 2010.



3. When Petitioners’ properties were taxed, the assessors determined the



market value by considering the value of nearby properties, but



excluded those bank transactions they found to be forced sales.



4. Between March and May of each assessment year, the City mailed



“value notices” to each Petitioner, containing his/her property’s



estimated market value, classification, the dates of the Local Board of



Review and County Board of Equalization, and other information



pursuant to Minn. Stat. § 273.121. These notices were mailed out at



least ten days prior to the meeting of the Local Board of Review, which



meets between April 1 and May 31 of each year pursuant to Minn. Stat.



§ 274.01.



5. In November of each year, the County mailed Truth-in-Taxation



Statements to all Petitioners, stating the properties’ estimated market



values and estimated proposed property taxes for the coming year.



6. By March 31 of each year, the County mailed property tax statements



that included the properties’ estimated market value, the properties’



classifications, and the amount of tax payable, along with other



information.



7. Because the City of Minneapolis is a city of the first class, the



Minneapolis City Assessor’s Office performs the duties of the county



assessor within the city.



8. None of the Petitioners served and filed a Chapter 278 tax petition on



or before April 30 of the year in which the tax became payable.



9. None of the Petitioners pursued any of the three administrative



remedies authorized by Minnesota law to challenge their tax



assessments.



10. None of the Petitioners claim to have not received the value notices,



Truth-in-Taxation Statements, or property tax statements that were



mailed to them.




Standard of Review



The Minnesota Tax Court follows the Rules of Civil Procedure for the



district courts where practicable.[2] Minnesota Rules of Civil Procedure, Rule 12.02



states that “lack of subject matter jurisdiction” and “failure to state a claim under



which relief can be granted” are defenses which may be made by motion at the



option of the pleader.[3] Rule 12 provides for dismissal of a complaint where



the complainant has not stated a cognizable claim or cause of action under the



substantive law. When considering a motion to dismiss, courts assume that the



allegations of the complaint are true.[4]



On a motion to dismiss for failure to state a claim, a complaint must be



dismissed if it fails to set forth “a legally sufficient claim for relief.”[5] Dismissal is



appropriate if the moving party can demonstrate that it is not possible to grant



relief on any evidence that might be produced consistent with the complaint.[6]



Courts are not bound by legal conclusions stated in a complaint when



determining whether the complaint states a claim upon which relief can be



granted.[7] To survive a motion to dismiss, a plaintiff must plead facts that “raise a



right to relief above the speculative level.”[8]



Claims against County Respondents



Truth-in-Taxation Statement



There is no dispute that for taxes assessed in 2008, 2009, and 2010, the



Hennepin County Auditor-Treasurer prepared and mailed Truth-in-Taxation



Statements to the owners of residential property in the City of Minneapolis. It is



also undisputed that the Truth-in-Taxation Statements were in the form



prescribed by the Commissioner of Revenue according to Minn. Stat. § 275.065, which provides as follows:


Subd. 3. Notice of proposed property taxes. (a) The county auditor


shall prepare and the county treasurer shall deliver after November 10


and on or before November 24 each year, by first class mail to each taxpayer at the address listed on the county’s current year’s assessment roll, a notice of proposed property taxes. (b) The commissioner of revenue shall prescribe the form of the notice.



Petitioners’ Amended Complaint pleads six counts against the County



Respondents related to the Truth-in-Taxation Statement.[9] The County argues



that the counts fail to state a claim upon which relief can be granted because the



County is without discretion in the information that must or may be included with



the Statement. We agree.



Minnesota Statute Section 645.44, subdivision 16 states that the word



“shall” is mandatory. In other words, Minn. Stat. § 275.065 mandates that the



county auditor prepare and deliver a notice of proposed property taxes between



November 10 and 24 of each year and that the Commissioner of Revenue



prescribe the form of the notice. These actions are “ministerial” duties. In Kelly v.



City of Minneapolis,[10] the Minnesota Supreme Court defined “ministerial” duties



as “absolute, certain, and imperative, [and] involv[ing] merely execution of a



specific duty arising from fixed and designated facts.’”[11] “A ministerial duty is



simple and definite, leaving nothing to the discretion of the official.”[12]



Here, Petitioners do not claim that the County’s Truth-in-Taxation



Statements failed to contain the information spelled out in the statute. Nor do



they claim they did not receive the Statements. Rather, Petitioners argue that the



legal notices were deficient because they were based upon alleged



impermissible and discriminatory valuation practices. Petitioners claim that



because of these practices, the Statements did not constitute sufficient notice to



the Petitioners as required by statute.



The County argues that what is required under Minn. Stat. § 645.44, subd.



16, is that the Hennepin County Auditor-Treasurer prepare the Truth-in-Taxation



Statement, in the form prescribed by the Commissioner of Revenue, and mail the



notice to each property owner. Further, the County claims that since there is no



discretion under the statute with respect to the preparation, content, and mailing



of the Statements, the County simply is performing its ministerial duties in acting



according to statute. Additionally, the County urges us to dismiss Counts 5, 6, 7,



18, 19, and 20 for failure to state a claim upon which relief can be granted



because the County lacks discretion as to the information that may or must be



included in the Truth-in-Taxation Statement.



The Minnesota Supreme Court’s definition of “ministerial duties” stated in



Kelly,[13] includes the County’s actions in preparing and sending out the Truth-in-



Taxation Statements to Petitioners. Minnesota Statute Section 275.065,



subdivision 3(a) imposes a mandatory, nondiscretionary, ministerial duty to



prepare and mail the Truth-in-Taxation Statement in the form prescribed by the



Commissioner, and the County is without discretion in the information that must



be included in the Statement or that may be included with the Statement. In this



case, there is no claim that the Truth-in-Taxation Statements sent by the County



did not comport with the statutes under which they were sent. The County



exercised no discretion as to the content, timing, or preparation of the



Statements. Rather, they were done according to the statute and sent in the



manner prescribed. Under the circumstances, we find that the County was simply



satisfying ministerial duties in preparing and sending out the Statements to



Petitioners.



Petitioners next challenge the Statements that the County sent, alleging



they did not adequately inform taxpayers of the exclusion of bank sales by the



assessor in valuing their properties. In Programmed Land, Inc. v. O’Connor, [14]



the Minnesota Supreme Court defined the requirements for a property tax notice



as follows:



In the context of challenges to property taxes, notice need not


expressly identify every factor and decision that went into the determination of the estimated or final tax on the parcel. The


taxpayer may not know for certain whether the estimated tax is


lawful or correct by looking at the notice, but the taxpayer is on


notice that a tax of an estimated amount will be levied according to


the stated value of the property…[T]he federal and state constitutions require that the taxpayer have an opportunity to question the validity


and amount of the tax, not be apprised of all elements of the tax that


might contain errors. Such a lengthy document not only would be burdensome to local governments but likely would go unread by taxpayers.[15]



Petitioners make no claim that the Statements they received did not



contain the information required by statute or that they were not sent according to



the required procedure. Instead, Petitioners claim that the notices were



inadequate because they failed to set forth the manner in which the assessments



were done—that is, the assessor’s decision to exclude bank sales as forced



sales from the comparables he considered. Petitioners’ position, however, is



unsupported under Minnesota case law.[16] The Statements gave the taxpayers



adequate notice from which to inquire as to the basis of the tax and then



challenge it if the taxpayers believed the taxes were calculated improperly.



Petitioners’ final assertion that the County’s inaction constitutes malice



is not substantiated by the factual allegations in the Complaint. There is no



allegation that the County intentionally did a wrongful act or willfully violated a



known right by sending out the Truth-in-Taxation Statements to Petitioners.



Because the County Respondents were simply carrying out their



ministerial duties under Minn. Stat. § 275.065, subd. 3(a), and because there is



no evidence in the record to substantiate Petitioners’ claims that they did not



receive adequate notice or that the County acted maliciously in following the



letter of the law, Counts 5, 6, 7, 18, 19, and 20 must be dismissed for failure to



state a cause of action.



Assessment of Market Value



All real property in the state of Minnesota is taxable.[17] The Minnesota



Legislature prescribes the procedures, rates, and exemptions that cities must



follow when taxing real property.[18] All parties agree that the City of Minneapolis



Assessor’s Office performs the duties of the county assessor within the city



because Minneapolis is a city of the first class.[19]



Petitioners’ Complaint includes 22 counts which plead claims against the



County related to the assessment of residential property in the City of



Minneapolis.[20] It is undisputed that the City of Minneapolis is a city of the first



class pursuant to Minn. Stat. § 410.01 and that as a city of the first class, the



Minneapolis City Assessor has the powers and performs the duties ascribed to a



county assessor pursuant to Minn. Stat. § 273.063.[21] Petitioners claim that



despite the statute, the County Respondents retain specific responsibilities that



include the City of Minneapolis and cannot be allowed to remain complicit in



allegedly known illegal practices and benefit from them through increased



revenues. The County Respondents argue that since the Hennepin County



Assessor has no authority to review, correct, or in any way supervise the



assessment practices of the City of Minneapolis Assessor, Petitioners have no



cause of action against them. We agree.



Petitioners cite no authority for their argument that Section 273.061 does



not permit the City of Minneapolis to have sole authority to assess properties



within its boundaries. In fact, Section 273.063, in relevant part, provides, “[i]n



counties having a city of the first class, the powers and duties of the county



assessor within such city shall be performed by the duly appointed city



assessor.” Petitioners argue that a county retains those Section 273.063 duties



which exceed the boundaries of a city of the first class. While that may or may



not be the case, here there is no dispute that the parties are seeking relief with



respect to properties that are located within the City’s boundaries. Petitioners’



argument that the county assessor is granted specific duties according to statute



is correct as far as it goes, but that does not prevent those duties from being



performed by the city assessor pursuant to Section 273.063.



. In Northwestern National Life Ins. Co. v. County of Hennepin,[22] we found



the Hennepin County Assessor should not be a party in an appeal of the market



value of property located in the City of Minneapolis because the City Assessor



was independent of the supervision of the county assessor, and the county



assessor had no statutory right or duty to assess property within the City of



Minneapolis or to supervise the assessments of the city assessor pursuant to



Minn. Stat. §§ 410.01 and 273.063.



Since the Hennepin County Assessor has no authority to review, correct,



or in any way supervise the assessment practices of the City of Minneapolis



Assessor, Petitioners have failed to state a claim against County Respondents



upon which relief can be granted. Thus, the County’s Motion to Dismiss is



granted with respect to the remaining allegations against them set forth in Counts



1, 2, 3, 8, 9, 10, 11, 12, 13, 14, 15, 16, 21, 22, 23, 24, 25, 26, 27, 28, 29, and 30.



The County shall be dismissed from this action.



Claims Against City Respondents



Petitioners’ Failure to Pursue Chapter 278 Petitions



The City Respondents argue that a petition under Minn. Stat. Ch. 278 is



the appropriate remedy for challenging property taxes on five statutorily



enumerated bases, namely allegedly improper valuation, classification,



exemption, unfair assessment, or illegality. Because Petitioners seek to



challenge the valuations of their properties, the City Respondents contend they



should have pursued Chapter 278 petitions. Inasmuch as Petitioners do not



challenge the constitutionality of any Minnesota statute, the City Respondents



argue that Petitioners could and should have sought relief under Chapter 278.



The statutory framework requires that petitions only challenge one



assessment year and must be filed by April 30th of the year that the tax becomes



payable.[23] Petitioners’ Complaint in this matter was filed on November 7, 2010,



and it was not served in the manner required by Chapter 278. Petitioners’



Amended Complaint was then filed on or about December 2, 2010, correcting the



previous deficiency in service. Thus, the City Respondents argue that Petitioners



cannot be permitted to avoid the filing deadlines set forth in the statute by



recasting their claims related to their 2008 and 2009 assessments in the rubric of



constitutional jurisprudence. As for the 2010 assessment, the City Respondents



claim the Amended Complaint is fatally deficient because it includes multiple



petitioners.



Under Minnesota law, a property taxpayer can contest the valuation of his



or her property in one of four main ways. First, before the Local Board of



Review meets, a property owner may request a change informally by contacting



the local assessor.[24] Second, a property owner can appear before the Local



Board of Review or County Board of Equalization to contest the valuation of their



property.[25] Third, a property owner may file an abatement pursuant to Minn.



Stat. § 375.192, subd. 2, challenging the valuation of his/her property and



seeking reduction of the property’s estimated market value or taxes that were



erroneously or unjustly paid.[26] Fourth, a property owner may serve and file a



Chapter 278 tax petition to contest the valuation of their property, among other



challenges.[27] None of the Petitioners pursued any of the three administrative



remedies or the Chapter 278 petition remedy to challenge their property tax



assessments.



A petition under Minn. Stat. Ch. 278 is the appropriate remedy for



challenging property taxes on five statutorily enumerated bases, namely



improper valuation, classification, and exemption, unfair assessment, or



illegality.[28] Chapter 278 benefits both taxpayers and local governments—



providing taxpayers with an efficient mechanism to object to property taxes, and



also providing for the prompt collection of taxes and ensuring a reliable stream of



revenue for local governments.[29] The City argues that Minn. Stat. Ch. 278



provides a process to challenge any alleged issues in the assessment of



Petitioners’ properties in past years, and that their failure to do so precludes them



from now bringing those claims after the statutory time for appeal has lapsed.



The City further argues that Petitioners should not be permitted to abrogate the



statute of limitations set forth in Section 278.01 and subvert the policies the time



limitation was intended to serve.



Again, we turn to Programmed Land, Inc.[30] where the Minnesota Supreme



Court addressed a case similar to the one we consider in which the taxpayers



failed to avail themselves of adequate statutory remedies to challenge the



application of class rates by the assessor. The Supreme Court found that the



assessor’s acts, which the taxpayers claimed resulted in the partial, unfair, or



unequal assessment of property were subject to challenge under Minn.



Stat. § 278.01, subd. 1, and having failed to avail themselves of adequate



statutory remedies, the taxpayers could not seek to pursue equitable or common



law causes of action. Because the taxpayers had an adequate remedy provided



by statute under Chapter 278 and through local review and abatement to seek



redress, the Supreme Court refused to allow them to pursue an independent



cause of action in order to claim their constitutional due process rights or equal



protection rights had been violated.



Similarly, Petitioners in this case seek to challenge alleged issues of the



assessment of their properties. Specifically, Petitioners contend that the City



incorrectly excluded a certain type of open market sales—namely, bank sales--,



resulting in non-uniform assessment and Petitioners bearing disproportionate



shares of property taxes compared to those residential property owners whose



homes are located in other communities. Clearly, this is related to the



assessment process, which Chapter 278 was designed to address. Because



Petitioners did not timely and properly pursue relief under the statute, they



cannot now challenge the valuation of their properties by recasting their claims



under constitutional law theories.



Petitioners next claim that they were unaware of the assessor’s practice of



excluding certain sales of residential property at the time they were notifies of



each year’s property tax valuations. The City Respondents argue that Petitioners’



alleged ignorance of the basis for their assessments in prior tax years does not



excuse their failure to pursue their statutory remedies. We agree. “[A] person



who pays an illegal or irregular tax, even if ignorant that the tax is illegal or



irregular, is not entitled to recover the tax in equity when that person has a



statutory remedy by review, appeal or defense to proceedings to enforce the



tax.”[31] Here, Chapter 278 provided a process to challenge any alleged issues in



the assessments of Petitioners’ properties in past years. Petitioners’ failed to file



petitions in 2008 and 2009 and cannot now seek to resuscitate claims from those



tax years. The Complaint to challenge assessments made in 2008 (payable



2009) and 2009 (payable 2010) was not filed until December 2, 2010, so that



Petitioners are untimely in challenging the 2008 and 2009 assessments.



As for 2010 (payable 2011) taxes, although the Amended Complaint was



timely served as a Chapter 278 petition, the City contends the pleading is fatally



defective because it includes multiple petitioners. The City relies upon Rau v.



County of Kandiyohi[32] in which this Court held that petitioners must file their



petitions individually and not as a group. Since all Petitioners filed jointly the



Amended Complaint, and the time to remedy this procedural defect has passed,



the City Respondents argue they are entitled to dismissal of the action because it



is, in essence, an untimely and deficient tax petition. Petitioners claim that the



plain language of Minn. Stat. § 278.01 does not require that tax appeals be



brought individually, citing several cases allowing a Chapter 278 appeal to



proceed with multiple petitioners. We disagree. First, we note that Minn. Stat. §



278.01, subd. 1(a) specifies that “[a]ny person…may have the validity of [their]



claim…determined…by the Tax Court by serving [a petition].” The language



refers in the singular to a “person.” In Rau,[33] we previously ruled “that there was



no authority under section 278.01, subd. 1, for the filing of petitioners’ multiple-



party petition.” Similarly, we find Petitioners in this case must file their petitions



individually, not as a group.[34] Further, the cases[35] cited by Petitioners are



distinguishable in that the multiple petitioners all maintained an interest in the



same property or the actions of multiple petitioners were consolidated by the



court after the individual petitions had been filed. That is not the situation in the



case now before us. Thus, as for the 2010 assessment, we find the pleading is



fatally deficient because it includes multiple petitioners and different properties



and must be dismissed.





Petitioners’ Constitutional Claims



Petitioners’ Amended Complaint alleges violations of their Equal



Protection and Due Process rights under the United States Constitution through



42 U.S.C. §1983. The City contends that claims involving prayers for monetary



damages or declaratory or injunctive relief in state tax matters under §1983 are



barred by law, these counts should be dismissed. Petitioners rely upon general



constitutional principles including fundamental fairness in arguing that they



present actionable claims under the Minnesota and U.S. Constitutions.



The United States Supreme Court held that Section 1983 claims for



damages in state tax cases were improper in Fair Assessment in Real Estate



Assn. v. McNary.[36] Affirming the dismissal of an action seeking compensatory



and punitive damages for deprivation of equal protection and due process rights



when state taxes were allegedly assessed unequally, the Court reasoned that the



principle of comity bars money damages from federal courts in tax matters under



§1983 where there is a plain, adequate, and complete state remedy.[37]



In National Private Truck Council, Inc. v. Oklahoma Tax Commission,[38]



the United States Supreme Court extended the prohibition of Section 1983



actions regarding state tax challenges to state courts. In that case, plaintiffs



brought a class action in state court challenging state taxes under § 1983,



seeking injunctive and declaratory relief.[39] The United States Supreme Court



affirmed the Oklahoma Supreme Court’s conclusion that neither injunctive nor



declaratory relief is available in state tax cases under a Section1983 theory, even



if brought in state court, when there is an adequate legal remedy.[40] “[W]e hold



that § 1983 does not call for either federal or state courts to award injunctive and



declaratory relief in state tax cases.”[41]



Since National Private Truck Council, state courts have further recognized



that there is no Section1983 claim for damages in state tax cases where an



adequate state law remedy exists.[42] Their rationale is clearly used to avoid



throwing state tax administration into disarray, allowing taxpayers to escape



ordinary procedural requirements imposed by state law.[43] Tax appeal remedies



in Minnesota have been ruled to be plain, speedy, and efficient, with Chapter 278



providing “an adequate, speedy, and simple remedy for any taxpayer to have the



validity of his claim, defense or objections determined by the district court.”[44]



“Viewing Ch. 278 in its entirety, we conclude that, in the interest of a better tax-



collection practice, the legislature intended that it should provide the exclusive



means by which a taxpayer may assert the defense of an unfair or unequal



assessment.”[45]



The City Respondents argue that Petitioners fail to state claims for



violations of Procedural Due Process and Equal Protection. In Programmed



Land, Inc., the Minnesota Supreme Court discussed the due process implications



when a plaintiff contended that its property taxes infringed upon those rights. The



Court found that “[d]ue process does not require any particular form of process



as long as it provides notice and a meaningful opportunity to be heard. Based



upon the variety of means provided in Minnesota Statutes to challenge property



taxes, we conclude that respondents received constitutionally sufficient due



process.” [46] Moreover, the United States Supreme Court has found, “It is well



established that a state need not provide predeprivation process for the exaction



of taxes.”[47]



Here, Petitioners had both notice of their property taxes and an



opportunity to be heard regarding any dispute of the assessed value of their



properties. Petitioners do not dispute that they received notice of their property



taxes through the City’s value notices and the County’s Truth-in-Taxation



Statements. Because Petitioners agree that they received both notice and an



opportunity to be heard, they fail to state a claim for a due process violation.



Similarly, Petitioners assert that their properties were assessed at higher



ratios when compared to other communities in violation of their equal protection



rights. It is important to note that Petitioners have not challenged the



constitutionality of the Minnesota Tax Code. Instead, Petitioners make



conclusory allegations that the City Respondents intentionally or arbitrarily valued



their properties at a lower rate than other properties. To survive a motion to



dismiss, the Petitioners must plead facts that “raise a right to relief above the



speculative level.”[48]



We now turn to the adequacy of Minnesota Statute Chapter 278 as a



remedy for Petitioners in this case. In Programmed Land, Inc., the Minnesota



Supreme Court held that Minn. Stat. §278.01 is the appropriate statutory remedy



for challenging property taxes on the statutorily enumerated bases including



valuation, unequal assessment, illegality, classification, and exemption. While the



Court did not determine that Chapter 278 provides the exclusive judicial means



to bring all property tax challenges, it is the proper remedy in most circumstances



for those five types listed in the statute. In this case, because assessment and



illegality (the constitutional violation claims) are among the five types of claims



listed in the statute and given the reluctance to allow injunctive or declaratory



relief, we find that Minn. Stat. Chapter 278 is the appropriate procedural remedy



for Petitioners’ claims. We, therefore, dismiss their requests for a declaratory



judgment and dismiss the claims brought under Section 1983.



Lastly, we address Petitioners’ claims for damages under the Minnesota



Constitution. The City Respondents assert that unlike the federal cause of action



created under 42 U.S.C. §1983, Minnesota has no statutory scheme providing for



private actions based on violations of the Minnesota Constitution. We agree.[49]



Thus, Petitioners’ claims for damages under the Minnesota Constitution fail to



state a cause of action and shall be dismissed.



Declaratory Judgment Act Claims



Petitioners seek to bring a variety of claims under the Uniform Declaratory



Judgments Act, Minn. Stat. Ch. 555. Petitioners’ claims seek to remedy



supposed violations of their federal constitutional rights. The Minnesota Supreme



Court has held that “the Declaratory Judgments Act is not available to test



questions of valuations or assessments in real estate tax matters.”[50] The



Minnesota Supreme Court specifically addressed the unavailability of the Act to



challenge taxes in Land O’Lakes Dairy Co. v. City of Sebeka,[51] stating as



follows:



In order that there shall be no future confusion on this particular


point of the law, we hold that in enacting M.S.A. Ch. 278 it was the intention of the legislature to provide an adequate, speedy, and simple remedy for any taxpayer to have the validity of his claim, defense,


or objections determined by the district court in matters where the taxpayer claims that his real estate has been partially, unfairly, or unequally assess, or that it has been assessed at a value greater


than its real or actual value.



The Court determined that in real estate matters, Minnesota Statutes Chapter



278 is the taxpayer’s remedy, and “the Uniform Declaratory Judgments Act [] is



not available…as an alternative remedy.”[52]



Therefore, Petitioners may not bring declaratory judgment causes of



action when the claims are more properly brought under Chapter 278. Because



Petitioners have an available statutory remedy, we dismiss their claims for



declaratory relief.





Mandamus Claim



In order to be entitled to mandamus relief, Petitioners must show three



elements: (1) the failure of an official to perform a duty clearly imposed by law;



(2) a public wrong specifically injurious to petitioner; and (3) no other adequate



remedy.[53] Mandamus “shall not issue in any case where there is a plain, speedy,



and adequate remedy in the ordinary course of law.”[54] Here, it is not alleged that



the City Assessor failed to perform a duty clearly imposed by law; in fact, the very



acts he performed are those ministerial acts which he did according to statute.



Petitioners admit that he performed his duty imposed by law to assess properties



in the City.[55] Thus, Petitioners fail to allege facts that meet the first element under



the mandamus analysis—failure to perform a duty clearly imposed by law. In



addition, Petitioners fail to state a claim that meets the third element under the



mandamus analysis because there is an adequate remedy at law. For these



reasons, we find Petitioners’ mandamus claims are dismissed.



Conclusion



In view of the foregoing, the claims set forth in the Amended Complaint



against the City and County Respondents shall be dismissed. Based upon this



result, the City’s claims of immunity and that the Petitioners have improperly



named the City of Minneapolis Assessor’s Office need not be addressed.



S. A. R.
















[1] This Court does not have original jurisdiction to hear an appeal challenging the constitutionality of government actions. However, in the March 4, 2011, Transfer Order transferred to the Tax Court the district court’s full legal and equitable powers to determine all matters that might come before us pursuant to the Erie shuffle. Erie Mining Co. v. Commissioner of Revenue, 343 N.W.2d 261 (Minn. 1984).



[2] Minn. Stat. § 271.06, subd. 7 (2000).



[3] Minn. R. Civ. P. 12.02 (a) & (e).



[4] Wiegand v. Walser Automotive Groups, Inc.. 683 N.W.2d 807, 811 (Minn. 2004).



[5] Bodah v. Lakeville Motor Express, 663 N.W.2d 550, 553 (Minn. 2003).



[6] Id.



[7] Herbert v. City of Fifty Lakes, 744 N.W.2d 226, 235 (Minn. 2008).



[8] Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see Hebert v. City of Fifty Lakes, supra and Bahr v. Capella University, 788 N.W.2d 76, 80 (Minn. 2010) (both referencing Twombly


standard).



[9] The six counts include 5, 6, 7, 18, 19, and 20.



[10] 598 N.W.2d 657, 664 (Minn. 1999).



[11] Id., quoting Cook v. Trovatten, 200 Minn. 221, 224, 274 N.W. 165, 167 (1937).



[12] Id.



[13] Kelly v. City of Minneapolis, 598 N.W.2d at 664.



[14] 633 N.W.2d 517, 529 (Minn. 2001).



[15] Id.



[16] Programmed Land, supra; Certain Lands in Redwood County, 40 Minn. 512, 518, 42 N.W. 473,


475 (1889).



[17] Amended Complaint 93.



[18] See Minn. Stat. Chs. 270-89.



[19] Amended Complaint 98; Defendant City of Minneapolis, City of Minneapolis Assessor’s Office and Patrick Todd’s Memorandum of Law in Support of Motion to Dismiss, p. 2; Memorandum of Respondent’s County of Hennepin, Hennepin County Assessor’s Office, and Hennepin County Assessor James R. Atchison, p. 9.



[20] The counts are 1, 2, 3, 8, 9, 10, 11, 12, 13, 14, 15, 16, 21, 22, 23, 24, 25, 26, 27, 28, 20, and


30.



[21] Amended Complaint ¶¶ 7 & 8.



[22] File No. 18797 (Minn. Tax Ct. July 21, 1994).



[23] Minn. Stat. §§ 278.01, subd. 1(c), 278.02.



[24] See, Minn. Stat. § 273.01.



[25] Minn. Stat.. §§ 274.01, subd. 1; 274.13.



[26] Id.



[27] Minn. Stat. § 278.01.



[28] See, Minn. Stat. § 278.01; Programmed Land, Inc., 633 N.W.2d at 523.



[29] See, Programmed Land, Inc., 633 N.W.2d at 525-26.



[30] Id.



[31] Programmed Land, Inc., 633 N.W.2d at 522 citing Gould v. Bd. of Comm’rs of Hennepin


County, 79 N.W. 303 (Minn. 1899).



[32] File Nos. C8-86-533, C8-86-550, C8-86-567 (Minn. Tax Ct. Feb. 24, 1987).



[33] Id.



[34] Minn. Stat. § 278.01.



[35] In Arcadia Development Corp. v. Hennepin County, the taxpayers were not challenging their property tax assessments pursuant to Chapter 278, but rather brought a class action asserting that the county underpaid interest on real estate refunds. In L.G.S.R.G. et al. v. O’Connor et al., File No. 97-567 (Minn. Tax Ct. Oct. 30, 1998) it is unclear what properties were involved, and the action was not a property tax appeal brought pursuant to Minn. Stat. Ch. 278. In H.J. of M. Land Venture et al. v. Hennepin County, File No. TC-1207 (Minn. Tax Ct. July 26, 1993), the multiple petitioners held interests in the same parcel of land. Similarly, in Community Housing Development Corp. v. Hennepin County, File No. TC-18582 (Minn. Tax Ct. Oct. 6, 1993) multiple petitioners brought an appeal pursuant to the same parcel of land.



[36] 454 U.S. 100, 102 (1981).



[37] Id. at 116.



[38] 515 U.S. 582, 589 (1995).



[39] Id. at 583-84.



[40] Id. at 589.



[41] Id.



[42] See Gen. Motors Corp. v. City of Linden, 671 A.2d 560, 565 (N.J. 1996), cert. denied 519 U.S. 816 (1996); Gen. Motors Corp. v. City & County of San Francisco, 69 Cal. App.4th 448, 457-61 (Cal. Ct. App. 1999); PPG Ind., Inc. v. Tracy, 659 N.E.2d 1250, 1252 (Ohio 1996); Murtagh v. County of Berks, 715 A.2d 548, 550-51 (Pa. Commw. Ct. 1998). See Allright Parking Minnesota, Inc. v. County of Ramsey, File No. C2-01-2979 (Minn. Tax Ct. Mar. 27, 2002).



[43] See Empress Casino Joliet, Corp. v. Baltimore Racing Club, ___F.3d___, No. 09-3975 (7th Cir. July 8, 2011).



[44] Land O’Lakes Dairy Co. v. Village of Sebeka, 31 N.W.2d 660, 665 (Minn. 1948).



[45] State v. Elam, 84 N.W.2d 227, 281 (Minn. 1957).



[46] Programmed Land, Inc., 633 N.W.2d at 528-29.



[47] McKesson v. Div. of Alcoholic Beverages, 496 U.S. 18, 37 (1990).




[48] Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see Hebert v. City of Fifty Lakes, 744 N.W.2d 226, 235 (Minn. 2008) and Bahr v. Capella University, 788 N.W.2d 76, 80 (Minn. 2010) (both referencing Twombly standard).



[49] See Jones v. James, 2005 WL 459652 (D. Minn. Feb. 24, 2005) (citing Bird v. State Dept. of Public Safety, 375 N.W.2d 36, 40 (Minn. App. 1985)); see also North Star Legal Foundation v. HoneywellProject, 355 N.W.2d 186, 188 (Minn. App. 1984).



[50] Fitchner v. Schiller, 135 N.W.2d 877, 881 (Minn. 1965).



[51] 31 N.W. 2d at 662.



[52] Id.



[53] Demolition Landfill Services, LLC. V. City of Duluth, 609 N.W.2d 278, 280 (Minn. Ct. App. 2000).



[54] Minn. Stat. § 586.02.



[55]Am. Comp. ¶¶ 12 and 13.

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