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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 |
The index is up-to-date.
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.
[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.
