Islamic Center of Nashville v. State of Tenn., 872 F.3d 377

Background

Islamic Center of Nashville (ICN), a religious nonprofit, financed a school building (2008–2013) via an ijara financing arrangement in which a bank held legal title while ICN retained possession and use.
County tax assessor returned the property to the tax roll during the period the bank held title; ICN regained title in October 2013 and then sought a retroactive tax exemption.
State Board of Equalization’s designee restored the exemption prospectively but denied exemption for the period of bank ownership; ICN appealed administratively to an ALJ and then to the Assessment Appeals Commission, which denied retroactive relief.
The Commission’s order noted judicial review is available in the chancery court; ICN did not seek chancery review and instead sued in federal district court asserting RFRA, RLUIPA, the First Amendment, and other claims.
The State moved to dismiss under the Tax Injunction Act (TIA), 28 U.S.C. § 1341; the district court dismissed for lack of subject-matter jurisdiction, and ICN appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the TIA bars ICN’s federal suit challenging Tennessee tax law	ICN contends it seeks only prospective relief (declaratory/injunctive) and constitutional adjudication, not to avoid paid taxes; therefore TIA shouldn’t bar the suit	State argues TIA bars federal-court challenges to state tax assessments where a plain, speedy, efficient state remedy exists; ICN’s claims seek to invalidate assessments and are thus barred	TIA applies: ICN’s claims effectively seek relief against state tax assessments and are barred from federal court
Whether ICN’s First Amendment and federal statutory claims create an exception to the TIA	ICN relies on free‑speech/establishment claims and cases suggesting federal courts should hear constitutional claims	State counters Grace Brethren and related precedent reject a First Amendment exception to the TIA	No exception; First Amendment claims do not exempt ICN from the TIA
Whether Hibbs v. Winn permits ICN’s suit despite the TIA	ICN cites Hibbs as allowing some federal review of tax‑related constitutional claims	State distinguishes Hibbs: plaintiffs there did not seek relief to avoid their own tax liability but to prevent state tax benefits to others	Hibbs is inapplicable—ICN seeks to avoid its own tax liability, unlike Hibbs plaintiffs
Whether Tennessee provides a "plain, speedy and efficient remedy" under § 1341	ICN argued appeal to chancery was elective/not mandatory; the Commission’s language ‘‘or other venue as provided by law’’ created uncertainty	State relies on Tennessee statutes directing judicial review in chancery court and precedent finding Tennessee procedures meet § 1341’s standard	Tennessee offers a plain, speedy, efficient remedy (chancery review); thus § 1341’s condition is satisfied
Whether district court abused discretion by dismissing without leave to amend	ICN claimed it should have leave to amend to cure pleading defects	State noted ICN never filed a motion or proposed amendment; futility since TIA bars federal jurisdiction	No abuse: ICN never sought leave and amendment would be futile given TIA bar

Key Cases Cited

California v. Grace Brethren Church, 457 U.S. 393 (1982) (TIA bars declaratory and injunctive relief challenging state tax administration; no First Amendment exception)
Hibbs v. Winn, 542 U.S. 88 (2004) (limits of TIA when plaintiffs do not seek to avoid their own tax liability)
Fair Assessment in Real Estate Ass’n v. McNary, 454 U.S. 100 (1981) (comity and TIA protect state tax administration; limits on federal relief)
Tafflin v. Levitt, 493 U.S. 455 (1990) (state courts presumptively competent to adjudicate federal claims)
Colonial Pipeline Co. v. Morgan, 474 F.3d 211 (6th Cir. 2007) (de novo review of § 1341 dismissal; discussion of state‑court adequacy)
Levin v. Commerce Energy, Inc., 560 U.S. 413 (2010) (comity doctrine precluding federal suits that effectively seek to alter state tax burdens)
Rosewell v. LaSalle Nat’l Bank, 450 U.S. 503 (1981) (comity and limits on federal jurisdiction over state taxation)