Coles County Property Tax Case – 7th US District Court of Appeals issues troubled ruling

Coles Co. (ECWd) –

A civil rights case brought against Coles County in June of last year has once again been dismissed, however, there appears to be a pattern from both courts.  Although we understand this article is very lengthy, there is simply no other way to deliver the analysis needed in this case.

When Coles County contracted a private individual to assess Coles county property, they failed to assess the whole county, which is what led to the lawsuit in the Federal Court under the Equal Protection rights outlined in the 14th Amendment of our US constitution.

Facts that have not been disputed are most troubling as are certain positions taken by the court clearly contradicting both Illinois law and Dillon’s Rule.

• “Coles County moved to dismiss the amended complaint for lack of jurisdiction under Federal Rule of Civil Procedure12(b)(1).”

Note that the County has focused on jurisdiction for the case rather than the facts of the case.  The reason for that is the facts support that Coles County did not follow the law and forcing the issue to the State Court has added costs that most citizens simply can’t face.

• “The district court granted Coles County’s motion to dismiss based on comity concerns rather than on the merits.”

How convenient to dismiss based on an alleged jurisdiction issue rather than the merits of the case.  I think that is most telling as it is clear the County has gone to great lengths to avoid even talking about the merits of the case.

• “the comity issue is dispositive and served as the basis for the district court’s threshold dismissal of plaintiffs’ claims without reaching their merits.”

Once again, the merits of the case have yet to be addressed. The reason this is important to understand is that many have already taken the position that the lawsuit was thrown out because the County did nothing wrong.  Such a position shows the ignorance of those saying it.  It is clear, NONE of the merits of the case have even been heard yet.

• “Therefore, we will also analyze plaintiffs’ claims solely according to comity principles.”

So it is clear, the merits of this case, as stated by the courts, is not being analyzed on the merits but rather the comity principle, which simply means they are fighting over which court gets to hear the merits of the case.

• Specifically, as relevant here, the comity doctrine bars taxpayers from asserting § 1983 claims against “the validity of state tax systems” via federal lawsuits.

When they say specifically, you would expect such specificity to be applicable to the case at hand however the above statement is not.  The taxpayers who brought this suit have not questioned the validity of the tax system.  They have questioned the unequal protection of the laws that govern that system.

• “Because comity is an abstention doctrine, this basis for dismissal is not technically correct.”

Did you catch that?  The 7th Circuit confirmed the basis for dismissal is not “technically correct”, yet they affirmed the lower court dismissal.

How and why would they affirm the lower courts ruling while acknowledging the lower courts dismissal was not technically correct?

• “When assessing a dismissal for want of subject-matter jurisdiction we may affirm on any ground the record supports.”

It appears the courts simply took the easy road and ignored the merits of the case.

• “Taxpayers seeking such relief must instead “seek protection of their federal rights by state remedies, provided of course that those remedies are plain, adequate, and complete.”

Interestingly we have yet to see any plain, adequate, and complete remedies being pointed to by the very courts that refuse to hear the case.  Neither the District Court nor 7th Circuit provided any case law or statutory support that this particular case has a plain, adequate and complete remedy available in State Court.  If there are any Tax lawyers that would like to chime in we would love to hear from you.

• (“Fair Assessment has been applied consistently to bar plaintiffs from bringing section 1983 suits challenging the validity or imposition of state and local taxes in federal courts” in the presence of “adequate, plain, and complete” state remedies.).”

Once again, this case is not about the validity or imposition of state and local taxes.  It is about one class of people being assessed while another is not. At no time has this case pointed to the validity of the assessments that were done?

• “In Illinois, aggrieved taxpayers can file property tax assessment complaints with a county board of review.” 

Once again the language in this decision points to the courts simply not comprehending what this case is about.  Yes, taxpayers can file a property tax assessment complaint with a county board of review but that is not what this issue is about.  Individually, those taxpayers did challenge their assessments, however, this case is NOT about their personal property assessment.  It is about being assessed while others were not.  The courts have yet to point to a state remedy for such a violation and by them pointing to the Board of Review as a mechanism for relief in this case confirms, they don’t get it.

• “This Court has previously explained the available remedy in Illinois for taxpayers who wish to appeal the decisions of these boards:”

This statement is most telling as the citizens who brought this case into the Federal Court did so because they were specifically told by the Illinois Department of Revenue, the agency where the board of review appeals is heard, that they have no jurisdiction in the matter at hand, assessing some rather than all. The court is wrong thinking that this matter can be handled at such a level, especially when that very agency has confirmed they have no such authority to intervene let alone provide relief.

• “Under Illinois law, taxpayers dissatisfied with a decision of a county Board of Review have two options for appeal”

When the court cites language for a matter that has nothing to do with the merits of this case it once again confirms the don’t understand the merits of this case. Not surprising since they refused to analyze those merits.  Had they done that they would better understand why the next statement flies in the face of our Illinois Judicial system.

• “Although the PTAB is not expressly authorized to consider claims beyond objections to the assessment values, we have found no provision in its authorizing statute or regulations precluding it from doing so.”

The Federal Courts have ignored Illinois’s recognition of Dillons Rule.  A rule applied to a local government that simply states you only have the power granted.  The Federal Courts acknowledged the Property Tax Appeal Board is NOT authorized to consider claims beyond objections to the assessment values.  That is where they should have stopped as under Dillions Rule, without such authorization you can’t do it.

Instead, the court took the position that since they have found no provision in the statute precluding the PTAB from considering claims beyond assessment values they point to States Courts as the place for this case.

This is a very flawed legal analysis for this simple fact and Board of Review is bound by Illinois law, which follows Dillon;s Rule and without statutory power to act, they can’t.   Any such case taken through the process the courts point to will be met with a simple dismissal as the PTAB was never given the power to address the merits of a case like this one.

• “And because an adequate remedy at law is not lacking, plaintiffs are not entitled to equitable relief. Lynk v. LaPorte Superior Court No. 2, 789 F.2d 554, 559 (7th Cir. 1986). Plaintiffs instead have an adequate state remedy via the appeals process outlined above, satisfying Fair Assessment.”

Their own language pointed to above disputes this claimed remedy.  In fact, these taxpayers went through the PTAB on their assessments and the merits of this case were NEVER addressed by the PTAB even though it was a major part of the discussion during those hearings.

The PTAB was never given the power to address this type of situation and it is for that very reason this matter falls into the laps of the Federal Courts.

• In their reply brief, plaintiffs cite an Illinois statute prohibiting tax objection complaints from being filed as class actions, and plaintiffs argue that this is a further reason why the state remedy is not completely adequate for their alleged harms. See 35 Ill. Comp. Stat. § 200/23-15(a). They note that in Rosewell v. LaSalle National Bank, the Supreme Court said federal-court jurisdiction may be appropriate in the TIA context “when the taxpayer’s state-court remedy would require a multiplicity of suits.” 450 U.S. 503, 517 (1981). It is not clear that the inability to pursue this action as a class action would result in a “multiplicity of suits.” Regardless, plaintiffs may not raise arguments for the first time in their reply brief. Laborers’ Pension Fund v. W.R. Weis Co., 879 F.3d 760, 768 (7th Cir. 2018).

While the facts of the case support the above steps to place this case in the Federal Courts, such a position was not raised in their reply brief so they ignore such facts.  This is known as a procedural defect.  Sadly for the taxpayers who brought this case forward, the failure to address this in their reply brief may have been the most important point to make from the beginning in this case.

• “The Court concluded comity warranted dismissal of the suit because, even if the plaintiffs could prevail on the merits of their equal-protection claim, the only means of providing relief would be to reduce the plaintiffs’ tax liability or to reshape the state’s tax code.”

Wrong. 

The relief is to assess everyone equally.  The State’s tax code has numerous problems but would not need to be reshaped in this case but rather simply followed.  Of interest though are the courts pointing to reshaping the state’s tax code as one of the means for relief.  We agree it needs to be reshaped and it appears they too see that need but failed to provide support for their statement.

• “Thus, addressing the merits of plaintiffs’ claims, even if they would result in additional taxes for the County, would plainly interfere with Coles County’s ability to collect taxes.”

Interfere with Coles County’s ability to collect taxes?  Nothing in this lawsuit would interfere with the County’s ability to collect taxes.  Any such claim is without merit or analysis.   Assess everyone and send the tax bills.  The collection of those bills is in no way affected by this case.

Below is a press release provided by the Lawyer handling this case for the taxpayers in Coles County.

“The plaintiffs are disappointed with the 7^th Circuit decision affirming the dismissal of their case.  The plaintiffs are going to proceed with a petition to the U.S. Supreme Court for the following reasons.  The Seventh Circuit recognized an exception to the rule that federal courts do not get involved with state tax assessment cases when the state courts do not provide complete and adequate remedies, but did not apply that exception as the plaintiffs argued.  The three-judge panel recognized that Illinois state courts only provide a monetary remedy for complaining landowners who pay property assessments, but the Court held that a monetary remedy was legally sufficient for a complete and adequate remedy.  The plaintiffs claim that under federal civil rights law they are entitled to federal court declaratory relief when state courts do not provide such relief—as is the case here.  Attorney Erick Kaardal states, “It is because the Illinois Supreme Court does not provide declaratory relief for unconstitutional property assessments that the federal court has jurisdiction.  The U.S. Constitution is worthless against local government tax assessments if it is unenforceable in both state and federal court. The federal exceptions to the Tax Injunction Act and comity doctrine were to prevent the U.S. Constitution from becoming worthless in this way.”

You can download the Court’s Order at this link or view below.

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