WAYSIDE CHURCH, an Illinois Not-For-Profit (Ecclesiastical) Corporation; Myron W. Stahl; Henderson Hodgens, individually and on behalf of a class of all others similarly situated, Plaintiffs-Appellants/Cross-Appellees, v. VAN BUREN COUNTY, in its individual Michigan municipal capacity and on behalf of a class of all other Michigan counties similarly situated; Karen Makay, in her individual official capacity as Treasurer of Van Buren County and on behalf of a class of all other Treasurers of Michigan counties similarly situated, Defendants-Appellees/Cross-Appellants.
Nos. 15-2463/2525
United States Court of Appeals, Sixth Circuit.
February 10, 2017
Rehearing En Banc Denied March 15, 2017
812 F.3d 812
* * *
We grant FirstEnergy‘s petition for review, and deny the Board‘s application for enforcement of its May 21, 2015 Decision and Order.
Argued: October 20, 2016
Before: CLAY, KETHLEDGE, and DONALD, Circuit Judges.
CLAY, J., delivered the opinion of the court in which DONALD, J., joined. KETHLEDGE, J. (pp. 823-25), delivered a separate dissenting opinion.
CLAY, Circuit Judge.
Plaintiffs Wayside Church, Myron Stahl, and Henderson Hodgens (collectively “Plaintiffs“) appeal the district court‘s order granting Defendants’ motion to dismiss the complaint, which asserted that Defendant Van Buren County and its Treasurer, Defendant Karen Makay (collectively “Defendants“), violated Plaintiffs’ Fifth Amendment rights by taking their property without just compensation. Defendants filed a cross-appeal arguing that the district court erred in determining that it could exercise jurisdiction over this case. For the reasons set forth below, we VACATE the judgment of the district court and REMAND with instructions to DISMISS the case for lack of subject matter jurisdiction.
BACKGROUND
Plaintiffs each owned real property in Van Buren County, Michigan in 2011 but failed to pay property taxes for that year. On March 1, 2012, pursuant to the General Property Tax Act (the “GPTA“),
In this suit, Plaintiffs seek return of the surplus funds because they allegedly possessed a cognizable property interest in each of their foreclosed properties and in the surplus proceeds generated by the sales, in connection with which Defendants were required to pay just compensation pursuant to the Fifth Amendment. Plaintiffs did not seek to challenge the process by which these asserted interests were taken; instead, Plaintiffs sought a declaratory judgment from the district court that, by not returning the surplus funds to the former owner-Plaintiffs, Defendants effectuated a taking without just compensation in violation of the Fifth Amendment.
On January 7, 2016, Defendants filed a motion to dismiss the complaint for lack of jurisdiction and for failure to state a claim upon which relief can be granted, pursuant to
Plaintiffs filed a timely appeal on November 30, 2015, arguing that the district court erred in dismissing its claims pursuant to
DISCUSSION
We are “bound to consider the 12(b)(1) motion first, since the Rule 12(b)(6) challenge becomes moot if this court lacks subject matter jurisdiction.” Moir v. Greater Cleveland Reg‘l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990).
A. Standard of Review
”
“Challenges to subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) ‘come in two varieties: a facial attack or a factual attack.‘” Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 440 (6th Cir. 2012) (quoting Gentek Bldg. Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007)). “A facial attack on the subject-matter jurisdiction“—like the one Defendants make here—“questions merely the sufficiency of the pleading.” Gentek Bldg. Prods., Inc., 491 F.3d at 330 (citing Ohio Nat‘l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)). “When reviewing a facial attack, a district court takes the allegations in the complaint as true,” just as in a
A factual attack, on the other hand, raises a factual controversy requiring the district court to “weigh the conflicting evidence to arrive at the factual predicate that subject-matter does or does not exist.” Gentek Bldg. Prods., Inc., 491 F.3d at 330 (citing Ohio Nat‘l Life Ins. Co., 922 F.2d at 325). “Where a trial court‘s ruling on jurisdiction is based in part on the resolution of factual disputes, a reviewing court must accept the district court‘s factual findings unless they are clearly erroneous.” RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1135 (6th Cir. 1996) (citing Ohio Nat‘l Life Ins. Co., 922 F.2d at 326) (additional citations omitted). “However, review of the district court‘s application of the law to the facts is de novo.” Id. (citing Ynclan v. Dep‘t of Air Force, 943 F.2d 1388, 1390 (5th Cir. 1991); Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995)).
Because the district court treated the challenge as a facial attack and made no factual findings in reaching its decision, the appeal is treated the same way. See DLX, Inc., 381 F.3d at 516. This Court thus reviews the judgment of the district court de novo. Moreover “where subject matter jurisdiction is challenged under Rule 12(b)(1), as it was here, the plaintiff has the burden of proving jurisdiction in order to survive the motion.” Rogers v. Stratton Indus., Inc., 798 F.2d 913, 915 (6th Cir. 1986).
B. Analysis
Defendants argue that we lack jurisdiction for two reasons: (1) Plaintiffs’ claims are not ripe for review; and (2) the Tax Injunction Act and principles of comity prevent jurisdiction from being exercised in federal court. We address these arguments in turn below.
1. Ripeness of Takings Clause Claims
“Applicable to the States through the Fourteenth Amendment, the Takings Clause of the Fifth Amendment ‘provides that private property shall not be taken for public use, without just compensation.‘” Wilkins v. Daniels, 744 F.3d 409, 416 (6th Cir. 2014) (quoting Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 536 (2005)). “As its text makes plain, the Takings Clause ‘does not prohibit the taking of private property, but instead places a condition on the exercise of that power.‘” Lingle, 544 U.S. at 536 (quoting First English Evangelical Lutheran Church of Glendale v. Cty. of Los Angeles, 482 U.S. 304, 314 (1987)). The Takings Clause‘s purpose is “not to limit the governmental interference with property rights per se, but rather to secure compensation in the event of otherwise proper interference amounting to a taking.” Id. at 537 (quoting First English Evangelical Lutheran Church of Glendale, 482 U.S. at 315). Consequently, “a State does not violate the Takings Clause ‘until it refuses to compensate the owner.‘” Wilkins, 744 F.3d at 417 (quoting Hensley v. City of Columbus, 557 F.3d 693, 695-96 (6th Cir. 2009)). Such compensation is not required to be “paid in advance of, or contemporaneously with, the taking.” Williamson Cty. Reg‘l Planning Comm‘n v. Hamilton Bank of Johnson City, 473 U.S. 172, 194 (1985). Therefore, a takings claim is not ripe “unless or until the State fails to provide an adequate postdeprivation remedy for the property loss.” Id. at 195 (quoting Hudson v. Palmer, 468 U.S. 517, 532 n.12 (1984)).
In Williamson County, the Supreme Court established a two part test to determine when a takings claim is ripe. “A federal court may hear a takings claim only after: (1) the plaintiff has received a ‘final decision’ from the relevant government actor; and (2) the plaintiff has sought ‘compensation through the procedures the State has provided for doing so.‘” Wilkins, 744 F.3d at 417 (quoting Williamson Cty., 473 U.S. at 186, 194-95). For plaintiffs to be obligated to seek redress in the state courts before litigating in federal court, the state procedures must be “reasonable, certain, and adequate . . . at the time of the taking.” Williamson Cty., 473 U.S. at 194 (quotation omitted).
This Court has previously acknowledged that the Williamson County test is not strictly jurisdictional but only “prudential,” and need not be followed “when its application ‘would not accord with sound process.‘”3 Miles Christi Religious Order v. Twp. of Northville, 629 F.3d 533, 541 (6th Cir. 2010) (quoting Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1012 (1992)). However, the requirement that aggrieved parties first seek compensation for the alleged taking in state court before bringing suit in federal court “will often serve important federalism interests.” Wilkins, 744 F.3d at 418. These interests are especially strong where, as here, the case “turn[s] on whether the plaintiff has a property interest as defined by state law.” Id. Therefore, we engage in the Williamson County analysis to determine whether jurisdiction is proper. See Miles Christi Religious Order, 629 F.3d at 541 (continuing to follow Williamson County test after acknowledging that it is not jurisdictional because the Court “fail[ed] to see why this prudential requirement should be ignored here“).
Defendants do not contest here that the first part of the test is satisfied and, instead, only appeal the district court‘s determination that no adequate state procedures existed in which Plaintiffs could challenge the alleged taking. Defendants claim, as they did before the district court, that Plaintiffs could have challenged the tax law on constitutional grounds in state court or brought an inverse condemnation action. The district court, however, found that such avenues of relief were foreclosed by the text of the GPTA.
Specifically at issue is the provision in the GPTA that addresses actions seeking monetary damages after foreclosure, codified as
If a judgment for foreclosure is entered under section 78k and all existing recorded and unrecorded interests in a parcel of property are extinguished as provided in section 78k, the owner of any extinguished recorded or unrecorded interest in that property who claims that he or she did not receive any notice required under this act shall not bring an action for possession of the property against any subsequent owner, but may only bring an action to recover monetary damages as provided in this section.
The district court agreed with Plaintiffs and found that “the only cause of action permitted by the GPTA is one for lack of notice (due process); specifically, the law allows a cause of action against a county treasurer for monetary damages only when a property owner ‘claims that he or she did not receive any notice required under this act.‘” (R. 38, PageID #409 (quoting
This analysis, however, suffers from two fatal flaws. First, and most importantly, in reading the above quoted section, the district court read subsection (1) to bar all actions challenging the GPTA except those challenging the notice procedures. However, the plain language of the text does not require such a restrictive reading. Instead, the statute limits a plaintiff to monetary damages when two conditions are present: (1) the former owner‘s rights have been extinguished by foreclosure proceedings for failure to pay property taxes; and (2) the former owner is challenging whether he received the notice required by other provisions in the GPTA. While the first condition is undoubtedly present in the case at bar, Plaintiffs here have stated explicitly that they are not challenging the notice provided to them, either on statutory or constitutional grounds. Because Plaintiffs’ Takings Clause claim does not meet both criteria, the restrictions on relief do not apply to this action.
Second, the district court erred in determining that the Court of Claims has exclusive jurisdiction over all claims challenging the GPTA. In arriving at that conclusion, the court conflated the terms “section” and “act.” It is clear from the text that the Michigan legislature used the term “act” to refer to the entire GPTA and the term “section” to refer to the more specific provisions in the act. For example, in providing definitions for the GPTA, the text states that “[a]s used in this section and sections 78a through 155 . . . (a) ‘Foreclosing governmental unit’ means . . . [t]he treasurer of a county.”
By the plain reading of the language at issue in this case, then, it is apparent that the word “section” in the phrase limiting jurisdiction to the Court of Claims—“The court of claims has original and exclusive jurisdiction in any action . . . under this section“—the legislature was limiting jurisdiction for claims brought pursuant to
Moreover, reading the statute in the way directed by the district court would mean the statute would be unconstitutional, which would violate the constitutional avoidance statutory construction rule. See Carey v. South Dakota, 250 U.S. 118, 122 (1919) (“Where a statute is reasonably susceptible of two interpretations, by one of which it would be clearly constitutional and by the other of which its constitutionality would be doubtful, the former construction should be adopted.” (citations omitted)); see also In re Treasurer of Wayne Cty. for Foreclosure, 478 Mich. 1, 732 N.W.2d 458, 462 (2007) (requiring courts to “presume a statute is constitutional and construe it as such, unless the only proper construction renders the statute unconstitutional” (citation omitted)). If the district court were right in its interpretation, the Michigan legislature would have created a statutory scheme by which plaintiffs were barred from asserting all but one federal right—due process notice—in state court. Such a scheme could not stand, as “[a] jurisdictional rule cannot be used as a device to undermine federal law, no matter how evenhanded it may appear.” Haywood v. Drown, 556 U.S. 729, 739 (2009); see also Felder v. Casey, 487 U.S. 131, 138 (1988) (“Under the Supremacy Clause of the Federal Constitution, ‘[t]he relative importance to the State of its own law is not material when there is a conflict with a valid federal law,’ for ‘any state law, however clearly within a State‘s acknowledged power, which interferes with or is contrary to federal law, must yield.‘” (quoting Free v. Bland, 369 U.S. 663, 666 (1962))). The Michigan Supreme Court also recognized the same limitation when discussing
Pursuant to Williamson County, we still must determine whether Plaintiffs are generally allowed to bring their Takings Clause and
Plaintiffs’ action, however, is not an action against the State of Michigan. Instead, Plaintiffs have sued Van Buren County and the county treasurer, as the county treasurer is the one responsible for effectuating the alleged taking of Plaintiffs’ properties. See
Furthermore, the argument that the Michigan jurisdictional scheme essentially requires that all claims against political subdivisions of the state be litigated in federal court when there is an adequate federal remedy ignores the Michigan state courts’ interpretation of its own jurisdictional statutes. In Gordon v. Sadasivan, 144 Mich. App. 113, 373 N.W.2d 258 (1985) (per curiam), the Court of Appeals of Michigan addressed the situation where a circuit court dismissed a suit brought pursuant to
2. Tax Injunction Act and Comity
The district court also determined that the Tax Injunction Act does not bar jurisdiction here. That Act declares that “[t]he district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.”
Another similar but distinct limitation on federal court jurisdiction over challenges to state tax laws is the principle of comity. This principle “prohibits ‘taxpayers . . . from asserting § 1983 actions against the validity of state tax systems in [the lower] federal courts.‘” Chippewa Trading Co. v. Cox, 365 F.3d 538, 541 (6th Cir. 2004) (alterations in original) (quoting Fair Assessment in Real Estate Ass‘n, Inc. v. McNary, 454 U.S. 100, 116 (1981)). “While this comity principle reflects some of the same concerns that led Congress to enact the Tax Injunction Act,
Plaintiffs here brought an action for both a declaratory judgment and monetary damages, and, thus, both the Tax Injunction Act and comity are at play. Because the two doctrines only allow federal courts to exercise jurisdiction when states courts cannot provide “plain, adequate, and complete” remedies, only one analysis is required. Fair Assessment, 454 U.S. at 116 n.8 (“We discern no significant difference, for purposes of the principles recognized in this case, between remedies which are ‘plain, adequate, and complete,’ as that phrase has been used in articulating the doctrine of equitable restraint, and those which are ‘plain, speedy and efficient,’ within the meaning of
CONCLUSION
For the foregoing reasons, we VACATE the judgment of the district court and REMAND with instructions to DISMISS the action for lack of subject matter jurisdiction.
DISSENT
KETHLEDGE, Circuit Judge, dissenting.
In this case the defendant Van Buren County took property worth $206,000 to satisfy a $16,750 debt, and then refused to refund any of the difference. In some legal precincts that sort of behavior is called theft. But under the Michigan General Property Tax Act, apparently, that behavior is called tax collection. The question here is—or at least in my view should be—whether the County‘s action is a taking under the federal Constitution.
Our court declines to answer that question because it holds—under the Supreme Court‘s decision in Williamson County Reg‘l Planning Comm‘n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985)—that the plaintiffs here must seek a remedy in state court rather than federal. I respectfully disagree with that conclusion. To begin with first principles: the federal courts indisputably have jurisdiction over this case, see
We have neither certainty nor sound process here. Whether Michigan substantive law provides a remedy for the type of taking alleged here is hardly certain. True, Michigan law provides a cause of action for so-called “inverse condemnations,” in which the government takes a property interest without a formal exercise of eminent domain. See Merkur Steel Supply, Inc. v. Detroit, 261 Mich. App. 116, 680 N.W.2d 485, 495 (2004). And in adjudicating those claims the Michigan courts have recognized what they call “de facto” takings, for which “no exact formula” exists. Id. But the Michigan courts have not yet determined, as a matter of state law, whether a local government‘s appropriation of property pursuant to the taxing power generally, or to the General Property Tax Act in particular, is a taking to the extent the government takes property worth more than the amount of taxes owed. Perhaps the Michigan courts will recognize this kind of inverse-condemnation claim as viable, not least because of the gross injustice—both equitably, and from the standpoint of the interests protected by takings law—caused by the kind
Equally problematic is the jurisdictional uncertainty that awaits the plaintiffs in state court. When they file their inverse-condemnation claim there, they must choose between two courts: the state circuit court, which is a trial court of general jurisdiction, or the state court of claims, which (like its federal counterpart) has jurisdiction over monetary claims “against the state or any of its departments[.]” See
That said, the jurisdiction of the court of claims over this case is likewise uncertain: under another statutory provision, no claimant “who has an adequate remedy upon his claim in the federal courts” may bring suit against the state or its departments in the court of claims.
Thus, as read by the majority, Williamson County sends these plaintiffs to state court, while state law directs them back to federal. The majority resolves this dilemma by declaring the state jurisdictional regime unconstitutional to the extent it would require a federal constitutional claimant to bring suit in federal court. Maj. Op. at 819-22. And thus, contrary to what the Michigan statutes actually say, the majority opines that the plaintiffs may bring suit in the state circuit court.
At this point one senses we have lost our constitutional bearings. The plaintiffs have asked us to adjudicate a claim arising under the federal Constitution, which is the most important type of claim that we can adjudicate. The claim itself is substantial: that, when a state takes fee simple to property in satisfaction of a tax obligation, the state effects a taking to the extent the property is worth more than the taxes and penalties owed. Complaint ¶ 4. Congress has granted us jurisdiction over that claim. We have a strict duty to exercise that
One further irony remains. The majority cites Haywood v. Drown, 556 U.S. 729 (2009), as support for its conclusion that Michigan‘s jurisdictional regime cannot, consistent with the federal Constitution, mean what its relevant jurisdictional provisions say. In Haywood, the Supreme Court held that state jurisdictional statutes that are designed to discriminate against “disfavored federal claim[s]” or that serve “as a device to undermine federal law” violate the Supremacy Clause. 556 U.S. at 738-39, 741. But here, in clear contrast to Haywood (which involved suits brought by inmates against corrections officers), there is no reason at all to think that, in directing federal takings claims to federal court, the State sought to undermine or discriminate against those claims in any way. Quite the contrary: if anyone has undermined the adjudication of federal takings claims against states and local governments, it is the federal courts—by the application of Williamson County.
I respectfully dissent.
LEGATO VAPORS, LLC, et al., Plaintiffs-Appellants, and Right to be Smoke-Free Coalition, Inc., Intervenor-Appellant, v. David COOK, et al., Defendants-Appellees.
No. 16-3071
United States Court of Appeals, Seventh Circuit.
Argued December 8, 2016
Decided January 30, 2017