Grant Taylor and Richard Scheiber v. Town of Cabot, The Cabot Community Association, Inc., and United Church of Cabot, Inc.
No. 2016-276
Supreme Court
March Term, 2017
2017 VT 92
Timothy B. Tomasi, J.
On Appeal from Superior Court, Washington Unit, Civil Division
NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal revision before publication in the Vermont Reports. Readers are requested to notify the Reporter of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made before this opinion goes to press.
Robert A. Gensburg and Hanne A.A. Trudeau, St. Johnsbury, for Plaintiffs-Appellees.
Daniel P. Richardson and Stephen F. Coteus of Tarrant, Gillies & Richardson, Montpelier, for Defendant-Appellant Town of Cabot.
PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.
¶2. Relying on
¶3. In the late 1980s, the U.S. Department of Housing and Urban Development (HUD) issued the Town a two-million-dollar Urban Development Action Grant (UDAG) to fund a loan to the Cabot Farmers’ Cooperative Creamery so it could construct a warehouse. By 2003, the Cooperative had paid the loan back to the Town. Pursuant to its agreement with HUD, the Town was allowed to keep the funds for uses consistent with the applicable HUD regulations and the federal
¶4. The CIFC fund gives grants and loans to local individuals or groups to promote its goals, including to “[p]rotect and enhance the quality of life and character of the town” and to “[i]mprove community infrastructure, facilities and services.” Groups eligible to apply for the grants include “community groups, non-profits, civic organizations, [and] fraternal organizations” as well as entities created by the Town, such as the Cabot Historical Society and the Cemetery Commission. In order to get a grant from the CIFC fund, the individual or group must submit an application to a committee appointed by the selectboard. The committee then reviews the application and decides whether the intended use of the grant is consistent with the goals of the CIFC fund. If an application is approved by the selectboard, it is put to a vote on Town Meeting Day and the voters decide if the proposed project is a worthwhile use of CIFC funds.
¶5. The United Church of Cabot (UCC) is a place of worship. It also makes its premises available for many nonsectarian community events and gatherings, and is an important and historic building in the town. In 2014, a consultant prepared a “Conditions Assessment,” which revealed that the building was in need of repair. The UCC spent significantly on those repairs, but needed more funds and accordingly applied for a $10,000 CIFC grant. The $10,000 amounted to a small portion of the total funds needed to repair the church. The reviewing committee approved the request and the matter was put to a vote on Town Meeting Day in 2016. The warned question was: “Shall the voters of the Town of Cabot approve the sum of ten thousand dollars ($10,000) from UDAG funds in 2016 for the Cabot Community Association (CCA) for the purpose of repairing the steeple, stairwell and other interior sections in urgent need of repair at the United Church of Cabot.”1 The voters approved the grant.
¶6. With respect to the Town‘s motion to dismiss, the trial court concluded that plaintiffs did have standing on two independent bases. First, the court concluded that plaintiffs had standing as municipal taxpayers. The court rejected the argument that municipal taxpayer standing does not apply because the funds at issue originated from federal coffers. It explained that the funds cannot reasonably be characterized now as anything other than public, municipal funds, and that the
¶7. The trial court awarded the preliminary injunction sought by plaintiffs after considering their likelihood of success, whether they would suffer irreparable injury in the absence of a preliminary injunction, and the potential for injury to the public interest or third parties. The court concluded that the first factor weighed in favor of an injunction primarily on account of the breadth of the Town Meeting Day warning concerning the vote. The warning authorized a grant “for the purpose of repairing the steeple, stairwell and other interior sections,” without any express restrictions against using the monies to repair religious areas such as the pulpit or altar. The court reasoned that without such restrictions, the grant was analogous to the unrestricted funding for a religious school that this Court struck down in Chittenden Town School District v. Department of Education, 169 Vt. 310, 738 A.2d 539 (1999). With respect to irreparable harm, the court concluded that even if the grantee could be required to repay the grant funds to the Town if plaintiffs prevailed in this case, plaintiffs will have suffered an irreparable affront to their values arising from the unconstitutional use of government dollars by the UCC during pendency of the action. And the court concluded that injunctions protecting freedoms guaranteed by the Declaration of Rights protect the public interest generally, in addition to plaintiffs’ own interests.
¶8. The trial court granted interlocutory appeal of its ruling. The Town challenges both the trial court‘s analysis of standing, and its award of a preliminary injunction. In particular, the Town argues that plaintiffs do not have municipal taxpayer standing because the funds at issue derived from a federal grant, and have been held separate from the municipal budget and municipal operating funds. It further argues that Flast is limited to cases in which taxpayers can show a nexus between their status as taxpayers and the constitutional violation, which is absent here. With respect to the preliminary injunction, the Town argues that the trial court misapprehended the merits for a host of reasons, including that the court failed to adequately account for the legal restrictions on the use of the grant funds in concluding that the grant ran afoul of the compelled support clause. It also challenges the trial court‘s conclusion that an award of the grant would cause the plaintiffs irreparable harm, even if it is subject to repayment if plaintiffs prevail. We consider each argument in turn.
I. Standing
¶9. We conclude that plaintiffs have standing to prosecute their claims. Municipal taxpayer standing under our law encompasses claims that municipal assets have been improperly wasted, and the record in this case supports the conclusion that the grant funds here are municipal assets notwithstanding the fact that the
¶10. We have held that the basis of municipal taxpayer standing “is not that any direct loss has been caused to the plaintiff, but that municipal assets have been improperly wasted.” Cent. Vt. Pub. Serv. Corp. v. Town of Springfield, 135 Vt. 436, 438, 379 A.2d 677, 679 (1977); see also Baird, 2016 VT 6, ¶ 21 (“Although taxpayer suits in Vermont are generally ‘recognized as appropriate vehicles for seeking relief from official action,’ to have standing a plaintiff must still demonstrate that she has either sustained some ‘direct loss’ or that municipal assets have been ‘improperly wasted.‘” (quoting Cent. Vt. Pub. Serv. Corp., 135 Vt. at 438, 379 A.2d at 679)).
¶11. Our law in this regard is consistent with the U.S. Supreme Court‘s understanding of municipal standing. Contrasting a claim of federal taxpayer standing with its municipal analog, the Supreme Court referenced “the rule, frequently stated by this court, that resident taxpayers may sue to enjoin an illegal use of the moneys of a municipal corporation.” Massachusetts v. Mellon, 262 U.S. 447, 486 (1923). The Court further explained:
The interest of a taxpayer of a municipality in the application of its moneys is direct and immediate and the remedy by injunction to prevent their misuse is not inappropriate. It is upheld by a large number of state cases and is the rule of this court. Nevertheless, there are decisions to the contrary. The reasons which support the extension of the equitable remedy to a single taxpayer in such cases are based upon the peculiar relation of the corporate taxpayer to the corporation, which is not without some resemblance to that subsisting between stockholder and private corporation . . . But the relation of . . . taxpayer[s] of the United States to the federal government is very different. [Their] interest in the moneys of the treasury—partly realized from taxation and partly from other sources—is shared with millions of others, is comparatively minute and indeterminable, and the effect upon future taxation, of any payment out of the funds, so remote, fluctuating and uncertain, that no basis is afforded for an appeal to the preventive powers of a court of equity.
Id. at 486-87 (citations omitted).
¶12. Notwithstanding the federal origin of the monies at issue here, we conclude that plaintiff can assert municipal taxpayer standing to challenge the Town‘s use of the funds. We base this conclusion on the language of the HUD authorization, the extensive control the Town has over the funds, the absence of meaningful federal oversight of the Town‘s use of the funds, and the fact that the funds would otherwise be available for potential municipal expenditures.
¶13. The Town‘s 1992 close-out agreement with HUD in connection with the underlying federal grant recognizes that the funds are possessed and controlled by the Town, and authorizes the Town to use them for a broad array of purposes, with virtually no oversight. The agreement provides that UDAG loan repayments to the
¶14. The scope of permissible expenditures pursuant to Title I is quite broad, encompassing the following:
- the elimination of slums and blight and the prevention of blighting influences and the deterioration of property and neighborhood and community facilities of importance to the welfare of the community, principally persons of low and moderate income;
- the elimination of conditions which are detrimental to health, safety, and public welfare, through code enforcement, demolition, interim rehabilitation assistance, and related activities;
- the conservation and expansion of the Nation‘s housing stock in order to provide a decent home and a suitable living environment for all persons, but principally those of low and moderate income;
- the expansion and improvement of the quantity and quality of community services, principally for persons of low and moderate income, which are essential for sound community development and for the development of viable urban communities;
- a more rational utilization of land and other natural resources and the better arrangement of residential, commercial, industrial, recreational, and other needed activity centers;
- the reduction of the isolation of income groups within communities and geographical areas and the promotion of an increase in the diversity and vitality of neighborhoods through the spatial deconcentration of housing opportunities for persons of lower income and the revitalization of deteriorating or deteriorated neighborhoods;
- the restoration and preservation of properties of special value for historic, architectural, or esthetic reasons;
- the alleviation of physical and economic distress through the stimulation of private investment and community revitalization in areas with population outmigration or a stagnating or declining tax base; and
- the conservation of the Nation‘s scarce energy resources, improvement of energy efficiency, and the provision of alternative and renewable energy sources of supply.
¶15. Moreover, the Town‘s reporting obligation to HUD was time-limited and expired long ago. The Town is required to account to HUD for a period of five years after issuance of a certificate of completion, and has no reporting requirements thereafter. In this case, the certificate of completion is dated April 1992. This means that for nearly twenty years, the Town has held part or all of the former federal grant funds with no requirement for accounting to HUD regarding the Town‘s use of the funds, and subject only to the limitation that the Town use the funds for purposes falling within the broad range authorized by Title I.
¶16. Finally, we agree with the trial court‘s inference that the grant program set up by the Town contemplates the possibility
¶17. Under these circumstances, the fact that the funds originated from the federal treasury does not undermine the conclusion that they are municipal assets for the purpose of municipal taxpayer standing. See Cent. Vt. Pub. Serv. Corp., 135 Vt. at 442, 379 A.2d at 691 (“A taxpayer‘s action is an appropriate vehicle for testing the legality of municipal expenditures from federal revenue sharing funds.“); Mathews v. Massell, 356 F. Supp. 291, 298 (N.D. Ga. 1973) (holding that where federal law imposed penalty and repayment obligation for misuse of federal revenue-sharing funds by municipality, municipal taxpayer alleged sufficient injury to assert municipal taxpayer standing to challenge the proposed use).
II. Preliminary Injunction
¶18. We affirm the preliminary injunction standard applied by the trial court, but conclude that the trial court erred in awarding the preliminary injunction because it overestimated the plaintiffs’ likelihood of success on the merits, and erred in concluding that plaintiffs would suffer irreparable injury in the absence of an injunction.
¶19. “A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). In each instance, we “must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief.” Id. The movant bears the burden of establishing that the relevant factors call for imposition of a preliminary injunction. Id. at 20. The trial court here rightly identified the main factors guiding its review under Vermont law: (1) the threat of irreparable harm to the movant; (2) the potential harm to the other parties; (3) the likelihood of success on the merits; and (4) the public interest.3 In re J.G., 160 Vt. 250, 255 n.2, 627 A.2d 362, 365 n.2 (1993).
A. Likelihood of Success on the Merits
¶21. Applying these standards, we first conclude that the trial court overstated the extent to which plaintiffs established a likelihood of success on the merits. Our analysis is framed by the Compelled Support Clause of
¶22. The
¶23. The focus of the Compelled Support Clause is the support for “worship” itself. This Court considered the Compelled Support Clause in depth in Chittenden Town School District. In that case, we considered whether a scheme that reimbursed tuition for sectarian schools from public monies ran afoul of the Compelled Support Clause. We explained that, “although the words might appear to be broader, . . . Article 3 is not offended by mere compelled support for a place of worship unless the compelled support is for the ‘worship’ itself.” Id. at 325, 738 A.2d at 550. The Court concluded on the record before it that religious instruction could not be separated from religious worship, and that the tuition payment system in question, with no restrictions on funding religious education, accordingly violated Article Three. Id. at 342-43, 738 A.2d at 562. The Court emphasized that the major deficiency in the tuition-payment system was the lack of restrictions that prevented the use of public money to fund religious education, and that it was not ruling more generally that children who attend religious schools may not receive public educational funding. Id. at 343-44, 738 A.2d at 562-63. The Court noted that its narrow ruling avoided offense to the Free Exercise Clause of the
¶25. The U.S. Supreme Court recently reaffirmed this very point in Trinity Lutheran Church of Columbia, Inc. v. Comer—a case that post-dates the trial court‘s decision in this case. 137 S. Ct. 2012 (2017). In that case, the Supreme Court considered a state-run program that provides grants to qualifying nonprofit organizations to install playground surfaces made from recycled tires. Trinity Lutheran Church sought a grant to replace a large portion of the playground that served its preschool and daycare center. The program had a strict and express policy of denying grants to any applicant owned or controlled by a church, sect or other religious entity, and it rejected Trinity Lutheran‘s grant request on that basis. The program exclusion was grounded in a provision of the
¶26. The Court in Trinity Lutheran differentiated the program for funding playground resurfacing from scenarios in which state funds are used to fund religious activity, distinguishing a prior decision in which the Court upheld the exclusion from a state-funded scholarship program for post-secondary education of funding for a devotional theology degree. Id. at 2022-25 (distinguishing Locke v. Davey, 540 U.S. 712 (2004)). In Locke, a state program provided scholarships to high-achieving students to pursue postsecondary education. Scholarship recipients were free to use the money at accredited religious and non-religious schools, but were not permitted to use the funds to pursue a degree that was “devotional in nature or designed to induce religious faith.” 540 U.S. at 716 (quotation omitted). A recipient was selected for a scholarship, but was denied funds when he refused to certify that he would not use them toward a devotional degree. The Supreme Court concluded that the state‘s denial did not run afoul of the Free Exercise Clause. Id. at 725. In Trinity Lutheran, the Supreme Court explained that in Locke, the State had not denied the scholarship because of who the recipient was, but, rather because of what he proposed to do—use the funds to prepare for the ministry. The scholarship program did not “require students to choose between their religious beliefs and receiving a government benefit.” Trinity Lutheran, 137 S. Ct. at 2023 (quotation omitted). Moreover, the Court “could ‘think of few areas in which a State‘s antiestablishment interests come more into play‘” than with respect to using taxpayer funds to pay for the training of clergy. Id. (quoting Locke, 540 U.S. at 722). The Court concluded, “nothing of the sort can be said about a program to use recycled tires to resurface playgrounds.” Id.
¶27. Applying strict scrutiny, the Court concluded that Missouri‘s interest in “skating as far as possible from religious establishment concerns” was insufficient to support the clear infringement on Trinity Lutheran‘s free exercise rights. Id. at 2024. The Court expressly noted, “the state interest asserted here—in achieving greater separation of church and State than is already ensured under the Establishment Clause of the Federal Constitution—is limited by the Free Exercise Clause.” Id.
¶28. The third foundation for our analysis—the record in this case—is not fully developed with respect to the anticipated and permitted use of the grant funds. The grant funds in this case were undisputedly allocated for the purpose of maintenance and repairs to a building that serves as a place of worship, is available for many nonsectarian community events and gatherings, and is an important and historic building in the town. The $10,000 grant amounts to a small portion of the total funds needed to repair the church. The warned question approved by the voters of the Town authorizes funding “for the purpose of repairing the steeple, stairwell and other interior sections in urgent need of repair at the United Church of Cabot.”
¶29. Although the parties relied on this warning as descriptive of the scope of the grant for the purpose of the preliminary injunction hearing, other uncontested documents in the record appear to significantly limit the scope of the grant. UCC‘s grant application describes a 2014 “Conditions Assessment” that enumerates and prioritizes the needed repairs to the UCC church building. Noting the significant work that had been completed already, the narrative explains that three exterior sides of the church need further painting, and that because some sill damage was discovered in one corner of the building when rotten clapboards were being replaced, other sills need to be assessed by removal of other sheathing material. Accordingly, the grant application seeks funding for two particular remaining projects:
Painting remaining block of the church: $18,000
Sill exposure and examination: $960
Total: $18,960
In the application, the UCC pledges to fund $8960 from its own resources, and seeks a $10,000 grant for the balance. Pursuant to the rules that apparently govern the program,4 grants may be used only for the purposes specified in the grant proposal as submitted by the Committee to the voters prior to the vote, and the Committee may withhold payment of granted funds if the project deviates significantly from its application and description. These apparent limitations on the use of the grant funds narrow the question in this case considerably: the question is not whether a grant from the Town for the broad purpose of repairs to the structure, including “interior sections,” offends the Compelled Support Clause; it is whether a grant for the purpose of paying a portion of the cost for painting three exterior sides
¶30. Given these considerations, plaintiffs’ path to success on the merits is narrow and challenging. The fact that the ultimate recipient of these funds is a church does not itself establish a violation of the Compelled Support Clause; the critical question is whether the funds will support worship. Chittenden Town Sch. Dist., 169 Vt. at 325, 738 A.2d at 550. In fact, denying the UCC secular benefits available to other like organizations might raise concerns under the Free Exercise Clause of the United States Constitution. To meet these concerns, plaintiffs will have to demonstrate that painting the church building and assessing its sills is more like funding devotional training for future clergy, as in Locke, than paying for a new playground surface on church property, as in Trinity Lutheran. Specified repairs to the church building itself admittedly fall somewhere between these two poles. In making their case, plaintiffs must persuade the court either that the Compelled Support Clause categorically precludes the use of public funds to pay for any repairs to a building that serves as a place of worship, without regard to the breadth and neutrality of the program pursuant to which the funding is provided, or that the specific repairs funded under this grant are prohibited. The first proposition is legally questionable; the second is not supported by the record.
¶31. Regarding the legal proposition, we are heavily influenced by the reasoning of the United States Court of Appeals for the Sixth Circuit in the case of American Atheists, Inc. v. City of Detroit Downtown Development Authority, 567 F.3d 278 (6th Cir. 2009). In that case, the City of Detroit, in preparation for hosting a Super Bowl, created a program to refurbish the exteriors of downtown buildings and parking lots in a discrete section of downtown Detroit. The program applied to all property within the defined area, and paid up to 50% of the refurbishing costs. The grants were directed to permanent physical improvements to building facades generally visible from a public right of way, or certain enumerated improvements to the street-side edges of parking lots. Three churches within the designated district participated, and collectively received 6.4% of the $11.5 million allocated for completed and authorized projects. The question before the court was whether payments to the three churches pursuant to this program violated the Establishment Clause of the
¶32. The Sixth Circuit emphasized several factors in concluding that the challenged grants were permissible. Detroit‘s “program allocate[d] benefits in an evenhanded
¶33. The court also identified other contexts in which public support that helps religious organizations is constitutionally permissible. It noted that a city may extend sewers and sidewalks to churches, synagogues and mosques, may provide police and fire-protection services to them, and may afford them property-tax exemptions available to charitable organizations. Id. at 291. The court noted, “[i]f a city may save the exterior of a church from a fire, it is hard to understand why it cannot help save the same church with peeling paint or tuckpointing—at least when it provides the same benefit to all downtown buildings on the same terms.” Id. at 292.
¶34. Finally, the court noted that a categorical no-aid rule to religious entities would mean that the government could not preserve the Ebenezer Baptist Church in Atlanta or the Old North Church in Boston, “both of which benefit from direct federal aid under the ‘Save America‘s Treasures’ program.” Id. at 299. Likewise, one-time emergency assistance through FEMA and other public agencies would be unavailable to churches devastated by natural disasters. Id.
¶35. Although the American Atheists court analyzed the issue pursuant to the Establishment Clause of the
¶36. Plaintiffs’ alternate path to success on the merits—establishing that this particular grant violates the Compelled Support Clause—is not well supported by the record as it currently exists. The CIFC grant funds are available to community groups, non-profits, civic organizations, fraternal organizations, and similarly situated groups in the Town, as well as to committees or other entities created by the Town, Village of Cabot, or the Cabot School District. By all appearances, the grant program is available to a broad and diverse collection of potential grantees that is defined without reference to religious affiliation. Moreover, the criteria for awarding the grants have nothing to do with religious
¶37. Likewise, plaintiffs may be able to establish that the award of the grant monies in this case crosses a line by funding religious worship. In their brief, they suggest that the approval by Town voters pursuant to the warned question is broad enough to allow the expenditure of public funds “on anything at all that needs repair, including purely religious parts of the building or religious artifacts.” However, on this record the grant is limited to two particular purposes—painting three sides of the exterior of the church building and examining the window sills in the church. The cost of these two projects is only a small fraction of the overall cost of the renovation project, and the public funding will accordingly amount to only a small fraction of the overall cost of the UCC‘s broader renovation. On this record, plaintiffs have not shown that the grant funds may be used to repair religious artifacts or other parts of the building that may more squarely run into the limitations of Article Three. Cf. Locke, 540 U.S. at 722 (stating, with respect to public funding for the training of church leaders, “we can think of few areas in which a State‘s antiestablishment interests come more into play“).
¶38. For the above reasons, we conclude on the basis of the current record that the plaintiffs’ likelihood of success on the merits weighs against the issuance of a preliminary injunction.
B. Irreparable Injury to Movant
¶39. Although our analysis of the merits likely resolves the preliminary injunction appeal, we also conclude that the plaintiffs would not suffer an irreparable injury in the absence of a preliminary injunction. The gravamen of plaintiffs’ complaint is that municipal funds have been misappropriated for unconstitutional purposes—an injury that could be remedied by repayment of the funds to the Town in the event that plaintiffs prevail. The claims in this case are narrow and distinguishable from the cases relied upon by the trial court to support its analysis of the irreparable injury factor.
¶40. A preliminary injunction will usually be denied “if the applicant has an adequate alternate remedy in the form of money damages or other relief.” Wright & Miller, Federal Practice & Procedure, § 2948.1 (3d ed. 2017). In this case, the injury at the root of plaintiffs’ claim is the use of municipal funds to support a place of worship in violation of the dictates of their respective consciences. If they prevail, the UCC will be ordered to repay the money, and the violation will be remedied. There is no evidence that the UCC would be unable to repay the $10,000 grant if plaintiffs prevail.
¶41. We recognize that in most cases, the violation of a plaintiff‘s constitutional rights is itself a sufficient irreparable injury to support a preliminary injunction. Generally, “[w]hen an alleged deprivation of a constitutional right is involved,
¶42. We conclude that this principle does not apply in this narrow class of cases in which the plaintiffs’ injury consists of an allocation of public funds that can be repaid. The injury here is not that plaintiffs are confronted with a fresh coat of paint on the UCC church building that violates their conscience; it is the notion that public monies were used to pay for that paint. In contrast to the imposition of cruel and unusual punishment, or the denial of the right of free speech, this is an alleged constitutional violation that can be “undone” through repayment of the challenged grant monies back to the Town. But see Annunziato v. New Haven Bd. Of Aldermen, 555 F. Supp. 427, 432 (D. Conn. 1982) (“Although the basis of plaintiffs’ standing to sue is their alleged economic injury, monetary damages would be inadequate compensation for the additional legal injury from the underlying violation of the Establishment Clause.“).
¶43. For the above reasons, we affirm the trial court‘s denial of the Town‘s motion to dismiss on standing grounds, and vacate the preliminary injunction in this case.
Affirmed in part, vacated in part, and remanded for further proceedings.
FOR THE COURT:
Associate Justice