Hoffer v. Ancel

Hoffer v. Ancel (2003-036); 176 Vt. 630; 852 A.2d 592

2004 VT 38

[Filed 28-Apr-2004]

                                 ENTRY ORDER

                                 2004 VT 38

                      SUPREME COURT DOCKET NO. 2003-036

                             NOVEMBER TERM, 2003

  Douglas Hoffer	               }	APPEALED FROM:
                                       }
                                       }
       v.	                       }	Chittenden Superior Court
                                       }	
  Janet Ancel and Charles Merriman     }
                                       }	DOCKET NO. S352-02 CnC

                                                Trial Judge:  Matthew Katz	

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  This appeal arises out of plaintiff Douglas Hoffer's dispute
  with the Vermont Department of Taxes (the department) over the department's
  adjustments for the years 1999 and 2000 to his education property tax
  assessments.  In March 2002, plaintiff brought suit in the Chittenden
  Superior Court against Janet Ancel, State Tax Commissioner, and Charles
  Merriman, a department attorney (defendants), in their individual
  capacities under 42 U.S.C. § 1983 claiming that defendants had violated his
  due process and equal protection rights under the Fourteenth Amendment to
  the United States Constitution.  In response to this suit, defendants filed
  a motion for summary judgment, arguing, among other grounds, that
  defendants were entitled to qualified immunity because plaintiff had not
  suffered any violation of his constitutional rights, any rights claimed
  were not clear and it was objectively reasonable for defendants to believe
  that their conduct did not violate plaintiff's rights.  The trial court
  agreed with this argument and granted defendants summary judgment.  We
  affirm. 
        
       ¶  2.  The Equal Educational Opportunity Act of 1997 (Act 60) funds
  the state's educational expenses through a general state grant and local
  property taxes. See Town of Killington v. State, 172 Vt. 182, 183, 776 A.2d 395, 396 (2001).  A component of Act 60, called "Homestead Property Tax
  Income Sensitivity Adjustment," limits educational property taxes paid by
  many homeowners and renters to a percentage of their income.  See
  Schievella v. Dep't of Taxes, 171 Vt. 591, 592-93, 765 A.2d 479, 481 (2000)
  (mem.); 32 V.S.A. §§ 6066(a), (b), 6066a(a). (FN1)  To achieve the property
  tax limitation, the department pays prebates in advance of the taxpayer
  receiving a property tax bill from the municipality to help pay that bill,
  and then reconciles the proper amount of the adjustment in connection with
  taxpayer's next income tax return.  See 32 V.S.A. § 6066a(a), (b).  The
  prebate represents the difference between the statutory percentage of
  expected income for the year and the property taxes on the homestead. (FN2)  
  When a homestead is jointly owned by two or more individuals, and they are
  not all in the same household, the property taxes for purposes of the
  adjustment calculation are allocated between the individuals in proportion
  to their ownership interest.  See id. § 6062(c).  Here, plaintiff, who
  co-owns his homestead fifty-fifty with another individual who resides
  elsewhere, but pays all the associated property taxes, applied for and
  received a $323.71 prebate for 1999.   This prebate amount was based on the
  department's erroneous assumption that plaintiff was the sole owner of the
  homestead and, thus, all the property taxes on it were attributable to him.

       ¶  3.  The following year plaintiff again applied for a prebate. 
  After not receiving his prebate,  plaintiff called the department to check
  its status.  At this time, plaintiff was informed that, although no formal
  action had been taken, the department would deny his 2000 application
  because he co-owned his homestead.  Plaintiff was also informed that the
  department was planning on initiating a recovery action for some or all of
  the 1999 prebate that was paid under the erroneous assumption that
  plaintiff was the only owner of the homestead.  During this conversation
  and an ensuing exchange of electronic mail messages, plaintiff was told he
  had a right to appeal the forthcoming adjustments to his property tax
  liability.  Following this conversation, plaintiff filed an administrative
  appeal seeking to declare § 6062(c) unconstitutional because it allocated
  only half of the property taxes to him for purposes of calculating the
  prebate even though he actually paid all the property taxes on the
  homestead.  Plaintiff's lawyer received an acknowledgment of the appeal on
  October 2, 2000 and notice that it had been docketed on October 11, 2000. 
  In the appeal, plaintiff alleged that the statute created an irrebutable
  presumption that violated his Fourteenth Amendment due process and equal
  protection rights.  That administrative appeal, which is not the direct
  subject of this case, was denied by the department.  Recently, the
  Washington Superior Court affirmed this denial, finding § 6062(c)
  constitutional.  

       ¶  4.  In October 2000, the department made the necessary
  adjustments and billed plaintiff $225.71, plus interest and penalties, for
  his 1999 prebate.  The bill did not clearly specify what it was for - in
  the box for the "reason code," the code for an "error in calculation" was
  inserted, but there was no further explanation.  In response, plaintiff
  sent a letter to the Commissioner of Taxes appealing the bill, asking for
  the basis of the assessment and adding the name of the attorney who he
  employed with respect to his Act 60 prebate.  Plaintiff received another
  similar bill two months later and sent another letter, similar to the first
  one and noting that the department had not responded to his appeal of the
  first bill.   
        
       ¶  5.  In early January 2001, in response to plaintiff's letters to
  the department, defendant Merriman corresponded with plaintiff's attorney,
  stating that the two bills were for the return of the 1999 prebate and
  providing a breakdown of the calculation behind the bills.  The letter
  added that "we have not received payment from Mr. Hoffer [and] . . .
  additional penalties and interest are accruing at this time." Following the
  Merriman letter, plaintiff continued to receive regular bills and on April
  3, 2001 received one delinquent debt notice from a collection agency. 

       ¶  6.      Ordinarily, if a taxpayer appeals an assessment, the
  department puts the account in "appealed status," and the taxpayer does not
  receive further demand or collection agency notices.  In this case,
  plaintiff's account was not immediately placed in that status.  It was
  placed in that status after plaintiff's lawyer complained about the
  collection agency notice, and thereafter plaintiff received bills showing
  the amount owed with interest, but not demands for payment.

       ¶  7.  Following the receipt of the collection agency notice,
  plaintiff filed suit in the U.S. District Court under 42 U.S.C. § 1983
  against defendants.  In that suit, plaintiff claimed defendants violated
  his due process and equal protection rights under the Fourteenth Amendment
  because: (1) the deficiency notices failed to provide him with meaningful
  notice; (2) defendants, in their attempt to recover the prebate
  overpayment, "threatened, harassed and annoyed" plaintiff; and (3)
  defendants were attempting to enforce a statute that facially violated the
  Due Process and Equal Protection Clauses of the Fourteenth Amendment.  The
  U.S. District Court dismissed that suit, holding that it was barred by the
  Tax Injunction Act, 28 U.S.C. § 1341, because plaintiff could seek an
  adequate remedy in state court.  The dismissal was affirmed by the United
  States Court of Appeals.  See Hoffer v. Ancel, No. 01-7880, 2002 WL 398421,
  at *4-*5 (2d Cir. Mar. 14, 2002).  

       ¶  8.  After the federal court dismissal was affirmed, plaintiff
  filed the lawsuit that is the subject of this appeal.  In this matter,
  brought under 42 U.S.C. § 1983, plaintiff claimed defendants violated his
  due process rights because the notices of taxes due failed to provide
  adequate notice and because defendants had engaged in a campaign of
  "harassment and threats" in an attempt to intimidate plaintiff into
  repaying the 1999 prebate.  In response to these alleged violations,
  plaintiff sought damages for his injuries, which included anxiety and
  emotional distress and "such other relief as is just."

       ¶  9.  While this matter was pending, and after defendants submitted
  their motion for summary judgment, the department heard plaintiff's
  administrative appeal where he sought to declare § 6062(c) unconstitutional
  and challenged his tax bills for 1999, 2000 and 2001.  During this appeal,
  the testimony indicated that for the year 2000, the department
  preliminarily paid plaintiff $98.00, using calculations required by §
  6062(c).  In reconciling the payment in connection with plaintiff's 2001
  income tax return, the department first determined that plaintiff was owed
  an additional $4.00.  It also determined, however, that plaintiff had
  failed to supply proof of his local property tax assessment with his income
  tax return, and denied the whole claim and billed plaintiff for the $98.00
  paid.  The grounds for the department's action were explained at the
  hearing.  After receiving this information, plaintiff submitted the
  appropriate property tax documentation, the $98.00 assessment was cancelled
  and plaintiff received the additional $4.00.  
        
       ¶  10.  Subsequent to his administrative hearing, plaintiff made a
  motion to amend his complaint adding a claim against defendant Ancel under
  42 U.S.C. § 1983, contending that she violated his constitutional rights
  with respect to the 2000 prebate.  The relief requested remained the same. 
  Defendant Ancel opposed plaintiff's motion, and in response plaintiff filed
  a reply memorandum in support of his motion to amend.  In this memorandum,
  plaintiff stated, for the first time, that he was seeking declaratory
  relief against defendant Ancel that the department's actions  were
  unconstitutional. The superior court considered plaintiff's motion to amend
  along with defendants' motion for summary judgment.  By entry order, the
  court granted defendants' motion for summary judgment, finding "Defendants'
  acts objectively reasonable.  No showing of bad faith.  Case dismissed."  
  On the same day, the court denied plaintiff's motion to amend, stating,
  "[s]till a damages claim.  Immunity still applies." 

       ¶  11.  Plaintiff now appeals the superior court's grant of summary
  judgment for defendants.  On appeal, plaintiff claims that defendants,
  under 42 U.S.C. § 1983, violated his constitutional rights with respect to
  plaintiff's 1999 and 2000 prebates. (FN3)  In opposition, defendants argue,
  as they did below, that they are entitled to qualified immunity because
  they did not violate any of plaintiff's constitutional rights. (FN4)  For
  the reasons set forth below, we agree.  

       ¶  12.  Applying the doctrine of qualified immunity the trial court
  granted defendants summary judgment.  When reviewing a grant of summary
  judgment, we apply the same standard as the trial court: summary judgment
  will be granted only if there exists no genuine issue of material fact and
  the moving party is entitled to judgment as a matter of law.  Springfield
  Hydroelec. Co. v. Copp, 172 Vt. 311, 313, 779 A.2d 67, 70 (2001).  The
  doctrine of qualified immunity "protects lower-level government employees
  from tort liability when they perform discretionary acts in good faith
  during the course of their employment and within the scope of their
  authority."  Winfield v. State, 172 Vt. 591, 593, 779 A.2d 649, 652 (2001)
  (mem.).  The viability of this defense depends on the "objective
  reasonableness of the official's conduct in relation to settled,
  clearly-established law."  Id.  Accordingly, as a threshold matter
  plaintiff must establish that defendants' acts violated his constitutional
  rights.  Saucier v. Katz, 533 U.S. 194, 201 (2001).  Further, the clearly
  established right defendants are alleged to have violated must be "specific
  to the circumstances."  Cook v. Nelson, 167 Vt. 505, 512, 712 A.2d 382, 386
  (1998).  Broad statements of rights are inadequate.  Id.
   
       ¶  13.     On this record, we cannot find that defendants
  violated plaintiff's due process or equal protection rights.  With respect
  to plaintiff's 1999 prebate, he claims: (1) the assessment notices issued
  by the department violated his due process and equal protection rights to
  meaningful notice; and (2) the department's failure to stop the notices
  once he appealed violated his due process and equal protection rights. 
  Regarding his 2000 prebate, plaintiff claims defendant Ancel violated his
  due process and equal protection rights because she acted in retaliation
  for plaintiff's federal lawsuit and failed to give notice that he could
  avoid repaying the prebate if he provided his property tax bill. 

       ¶  14.  While we understand plaintiff's concerns about his treatment
  by the department,  defendants' conduct does not rise to the level of a
  constitutional violation.   If we understand plaintiff's due process
  argument, it is that he was entitled not to be billed for a tax assessment
  that was under appeal, especially where the reason for the bill was
  unclear.  With respect to the 2000 prebate, he appears to go further and
  argue that he had a right to be notified of how he could cure the filing
  deficiency that resulted in the bill.  The Due Process Clause requires
  procedural safeguards against unlawful exactions.  See McKesson Corp. v.
  Div. of Alcoholic Beverages and Tobacco, 496 U.S. 18, 36-37 (1990).  As
  McKesson makes clear, however, due process is fully secured by a system
  that requires the taxpayer to pay the tax before having a right to contest
  it by way of refund.  Id. at 37; see also Williams v. State, 156 Vt. 42,
  56, 589 A.2d 840, 849 (1990).  If plaintiff may be required to pay the tax
  liability in order to obtain the right to contest it, we will not find a
  due process violation based on the fact that plaintiff was billed while his
  liability was still being adjuducated.  Cf. Morales v. Haynes, 890 F.2d 708, 710 (5th Cir. 1989) (per curiam) (seizure by IRS agent of property
  without notice to pay tax liability does not violate due process as long as
  there is an opportunity for post-collection review).  With respect to the
  content of the bills, or lack of content, we conclude that plaintiff was
  fully protected by his right to appeal, of which he was aware and exercised
  that right.  See Thomas v. Ind. Dep't of State Revenue, 675 N.E.2d 362,
  366-67 (Ind. Tax Ct. 1997) (eventual hearing cured failure of tax
  department to recognize taxpayer's protest of assessment); GNOC, Corp. v.
  Director, Div. of Taxation, 746 A.2d 466, 473 (N.J. Super. Ct. App. Div.
  2000) (although assessment notice failed to state reason for assessment,
  opportunity for hearing cures any due process violation).  Moreover, he
  received appropriate explanations of the reasons for the department's
  actions, albeit not in as timely a fashion as might be desirable. 

       ¶  15.     Overall, we concur with the analysis of the United States
  Court of Appeals for the Seventh Circuit with respect to damage suits
  against IRS agents in the leading case of Cameron v. Internal Revenue
  Serv., 773 F.2d 126, 128-29 (7th Cir. 1985):

    But the argument becomes completely untenable when as in this case
    the only claim is that the agents made mistakes, subjected the
    taxpayer to unnecessary inconvenience, failed to explore
    possibilities for settlement, or otherwise failed to come up to
    the highest standards of conduct for government officers dealing
    with citizens.   In an era of heavy taxation, many taxpayers, not
    merely "tax protesters," feel intense irritation at the federal
    tax authorities, and the courts would be flooded with frivolous
    cases if the unavoidable frictions generated by tax collection
    gave rise to potential damage claims against internal revenue
    agents.   Maybe if the complaint sketches a portrait of a lawless
    and arbitrary vendetta fueled by the power of the state, designed
    to harass by unwarranted intrusion into the minutia[e] of their
    financial affairs, and intended to abuse by the creation of
    palpably unfounded claims against their property which they can
    set to right only by unnecessary litigation, the taxpayer can
    resist a motion to dismiss;  but that is not the portrait sketched
    by the present complaint.   Even when liberally construed, this
    complaint, if true, shows only that internal revenue agents acted
    in a heavy?handed, insensitive, and careless fashion in processing
    the taxpayer's tax returns. For such conduct there is no damage
    remedy.  . . . [M]ore must be shown than a lack of courtesy,
    accuracy, and restraint by internal revenue agents in the
    processing of tax returns. 

  (internal citations and quotations omitted).  See also Foxman v. Renison,
  625 F.2d 429, 431-32 (2d Cir. 1980).

       ¶  16.  We are less clear on the substance of plaintiff's equal
  protection claim.  As near as we can tell, he is intending to raise a
  selective enforcement claim, based, for example, on the argument that he
  would not have been billed if he had been properly placed in appeal status. 
  An equal protection claim, however, requires more than a showing of
  different treatment.  Plaintiff must show "selective treatment . . . based
  on impermissible considerations such as race, religion, intent to inhibit
  the exercise of constitutional rights, or malicious intent to injure." 
  Parker v. Town of Milton, 169 Vt. 74, 81, 726 A.2d 477, 482 (1998). 
  Plaintiff has not alleged or shown an "illicit motive."  Id.; see also
  Diesel v. Town of Lewisboro, 232 F.3d 92, 103 (2d Cir. 2000).  The closest
  he has come is in his allegation that defendant Ancel did not inform him
  that he could cure the deficiency in his 2000 prebate filing by supplying a
  copy of his property tax bill because she was retaliating because of his
  federal suit. 

       ¶  17.  We recognize that plaintiff claims that defendants have
  violated a variety of his statutory rights.  See 32 V.S.A. §§ 3203,
  5886(a)(1) & (2).  Because plaintiff's complaint is based the Civil Rights
  Act, 42 U.S.C. § 1983, he must show a violation of his constitutional
  rights, and allegations of statutory violations do not by themselves meet
  plaintiff's burden.  See Coliseum Enters., Inc. v. Campbell, 173 Vt. 585,
  587, 795 A.2d 1212, 1215-14 (2002) (mem.).  In this case, we conclude that
  the statutory claims add nothing to plaintiff's argument.

       ¶  18.  Further, even if we could find that plaintiff could
  withstand summary judgment with respect to the substance of his claims, we
  must affirm the trial court's decision because defendants have not violated
  clearly established constitutional rights of which a reasonable person
  would have known.  Beyond general statements of the content of due process
  and equal protection, plaintiff has not specified what clearly established
  specific constitutional rights defendants have violated.  We can find none.
   
       ¶  19.  Finally, plaintiff argues that qualified immunity does not
  apply to plaintiff's declaratory judgment claim.  See Allen v. Coughlin, 64 F.3d 77, 81 (2d Cir. 1995) (the doctrine of qualified immunity does not bar
  claims for injunctive or declaratory relief).   Consistent with the
  analysis of the trial court, defendants argue that plaintiff failed to
  preserve this argument below.  Although plaintiff's request for such other
  relief as is just might be construed broadly to cover declaratory relief,
  see Nevitt v. Nevitt, 155 Vt. 391, 398, 584 A.2d 1134, 1138 (1990),
  plaintiff never made this argument in response to defendants' motion for
  summary judgment.  At best, he made the argument in his reply brief in
  support of the motion to amend.  We agree with defendants that the argument
  was made too late to preserve it.  In any event, our holding above that
  plaintiff has not made out any cause of action as part of our qualified
  immunity analysis means that he is also not entitled to declaratory relief.

       Affirmed.




                                       BY THE COURT:



                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice

                                       _______________________________________
                                       Paul L. Reiber, Associate Justice

                                       _______________________________________
                                       Frederic W. Allen, Chief Justice (Ret.),
                                       Specially Assigned


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                                  Footnotes


FN1.  The description in the text is a simplified description of the
  comparison.

FN2.  Homestead is defined in 32 V.S.A. § 5401(7) as the "principal dwelling
  owned and occupied by a resident individual" and up to two acres of
  surrounding land.

FN3.  Because the trial court reached the merits of plaintiff's motion to
  amend, for the purposes of this decision we treat the complaint as amended
  and consider plaintiff's claims with respect to his 2000 prebate.  

FN4.  They also claimed that plaintiff had failed to allege the requisite
  personal involvement of defendants in the complained of department actions,
  that a § 1983 action could not be brought with respect to tax
  administration actions and that defendants were entitled to absolute
  immunity.  Defendants have argued these points here as alternative grounds
  for affirmance.  In view of our disposition, we do not reach them.