Hollywood Door Company Inc. v. Normand et al, No. 2:2015cv05018 - Document 14 (E.D. La. 2016)
Court Description: ORDER AND REASONS granting 10 Motion to Dismiss. Signed by Judge Sarah S. Vance on 4/7/16. (jjs)
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Hollywood Door Company Inc. v. Normand et al Doc. 14 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA HOLLYWOOD DOOR COMPANY, INC. CIVIL ACTION VERSUS NO: 15-50 18 NEWELL NORMAND, SHERIFF AND EX-OFFICIO TAX COLLECTOR FOR THE PARISH OF J EFFERSON and PARISH OF J EFFERSON SECTION: R ORD ER AN D REASON S Defendants J efferson Parish and Newell Norm and, the sheriff and ex officio tax collector for J efferson Parish, m ove to dism iss plaintiff's com plaint for lack of subject m atter jurisdiction and failure to state a claim . Because the Tax Injunction Act deprives this Court of jurisdiction over plaintiff's case, the Court grants the m otion. I. BACKGROU N D This case arises out of a tax dispute between plaintiff Hollywood Door Com pany, Inc., a Louisiana corporation, and J efferson Parish. The dispute concerns the applicability of Louisiana's sales and use taxes to "contractor services" performed by plaintiff. Plaintiff's business involves purchasing doors and fireplaces out of state and selling or installing them in Southeast Dockets.Justia.com Louisiana.1 Although plaintiff sells som e products "over the counter" from its facility in J efferson Parish, it installs 95% of the products in its inventory as a licensed contractor.2 Plaintiff argues that because doors and fireplaces that are installed in im m ovable property becom e part of the im m ovable property, it need only pay use tax on goods that it installs, instead of the higher sales tax.3 Plaintiff claim s that it successfully litigated this position in a lawsuit against J efferson Parish and other defendants in 1985.4 From that date until 20 10 , plaintiff paid J efferson Parish use tax on the doors and fireplaces that it installed as a contractor within the parish.5 According to plaintiff, J efferson Parish acquiesced in this arrangem ent for nearly 25 years.6 In 20 10 , however, J efferson Parish issued a notice of delinquency assessing plaintiff for $ 65,679.32 of sales taxes allegedly owed.7 Plaintiff paid the assessm ent under Louisiana's paym ent-under-protest statute.8 It then 1 R. Doc. 1 at 1. 2 Id. 3 Id. at 1-2. 4 Id. at 2. 5 Id. at 3. 6 Id. 7 Id. 8 Id. 2 filed suit in the 24th J udicial District Court for J efferson Parish to recover the disputed paym ent.9 Although som e of plaintiff's allegations are difficult to follow,10 it appears that plaintiff nam ed as defendants not just J efferson Parish, but several other parishes and m unicipalities as well. The state-court judge apparently dism issed plaintiff's claim s against the additional entities, leaving J efferson Parish as the only defendant in the case.11 While its state-court suit rem ained pending, plaintiff filed this lawsuit in federal court, alleging Due Process, Equal Protection, and Com m erce Clause violations by J efferson Parish and Sheriff Norm and.12 Plaintiff seeks a declaratory judgm ent "that [it] is liable to J efferson Parish and its Sheriff only for sales or use taxes on doors and fireplaces installed in J efferson Parish or sold over the counter in J efferson Parish for installation by third parties."13 It also seeks an injunction preventing defendants from alienating the taxes that plaintiff paid under protest, as well as dam ages in the am ount of the disputed 9 Id. 10 Throughout its com plaint, Hollywood Door repeatedly references (often, with little explanation or elaboration) exhibits that are not attached to the pleadings and do not appear anywhere else in the record. 11 Id. at 5. 12 Id. at 3, 8. 13 Id. at 10 . 3 tax paym ent.14 Defendants m oved the Court to dism iss for lack of subject m atter jurisdiction and failure to state a claim .15 According to defendants, the Tax Injunction Act and principles of com ity preclude this Court from exercising jurisdiction over plaintiff's lawsuit. II. D ISCU SSION The Tax Injunction Act provides that "[t]he district courts shall not enjoin, suspend or restrain the assessm ent, levy or collection of any tax under State law where a plain, speedy and efficient rem edy m ay be had in the courts of such State." 28 U.S.C. § 1341. As the Fifth Circuit holds, "Section 1341 reflects 'the fundam ental principle of com ity between federal courts and state governm ents that is essential to Our Federalism , particularly in the area of state taxation.'" W ashington v. New Orleans City , 424 F. App'x 30 7, 30 9-10 (5th Cir. 20 11) (quoting Fair Assessm ent in Real Estate Ass'n, Inc. v. McNary , 454 U.S. 10 0 , 10 3 (1981)). Federal courts interpret Section 1341's text to advance its purpose of "confin[ing] federal-court intervention in state governm ent." ANR Pipeline Co. v. Louisiana Tax Com m 'n, 646 F.3d 940 , 946 14 Id. 15 R. Doc. 10 . 4 (5th Cir. 20 11) (quoting Arkansas v. Farm Credit Servs. of Cent. Ark., 520 U.S. 821, 826– 27 (1997)). Here, plaintiff seeks an injunction preventing J efferson Parish from alienating certain tax revenues, a refund of taxes that plaintiff paid under protest, and a declaratory judgm ent adopting plaintiff's interpretation of Louisiana law. Plaintiff argues that these rem edies will not interfere with Louisiana's tax collection efforts because plaintiff has already paid all disputed taxes to J efferson Parish under protest. This argum ent ignores the breadth of the Tax Injunction Act. As the Fifth Circuit holds, "Section 1341 is not a narrow statute aim ed only at injunctive interference with tax collection, but is rather a broad restriction on federal jurisdiction in suits that im pede state tax adm inistration . . . . " United Gas Pipe Line Co. v. W hitm an, 595 F.2d 323, 326 (5th Cir. 1979). Ordering J efferson Parish to hold tens of thousands of dollars in escrow and to refund taxes paid by plaintiff would disrupt Louisiana's system of tax adm inistration and underm ine the integrity of the state's treasury. See W ashington, 424 F. App'x at 311 (noting that "a suit for a refund can be as disruptive of state tax adm inistration as a suit for declaratory or injunctive relief"); A Bonding Co. v. Sunnuck, 629 F.2d 1127, 1130 (5th Cir. 1980 ) (noting "the im perative need of a State to adm inister its own fiscal operations"). A declaratory judgm ent in plaintiff's favor would be 5 equally disruptive. See Levin v. Com m erce Energy , Inc., 560 U.S. 413, 422 n. 2 (20 10 ) (noting that the use of federal declaratory relief to test state tax assessm ents can frustrate tax adm inistration and perm it taxpayers to escape procedural requirem ents im posed by state law). The Tax Injunction Act m andates that "such judicial threats should com e only from state courts." Sunnuck, 629 F.2d at 1133. Thus, the Court m ay not exercise jurisdiction unless Louisiana fails to provide a "plain, speedy, and efficient rem edy" for plaintiff's claim s. 28 U.S.C. § 1341. "State courts are equipped to furnish a plain, speedy, and efficient rem edy if they provide a procedural vehicle that affords taxpayers the opportunity to raise their federal constitutional claim s." Hom e Builders Ass'n of Mississippi, Inc. v. City of Madison, Miss., 143 F.3d 10 0 6, 10 12 (5th Cir. 1998). A state's rem edy is therefore adequate when it provides taxpayers with a complete judicial determination, with ultimate review available in the United States Suprem e Court. Sm ith v. Travis Cnty . Educ. Dist., 968 F.2d 453, 456 (5th Cir. 1992) (quoting Rosew ell v. LaSalle Nat. Bank, 450 U.S. 50 3, 514 (1981)). Im portantly, "the state rem edy need not be the best of all rem edies. [I]t need only be adequate." Hom e Builders, 143 F.3d at 10 12 (quoting Alnoa G. Corp. v. City of Houston, Tex., 563 F.2d 769, 772 (5th Cir. 1977)). 6 Here, Louisiana provides a procedural vehicle for raising constitutional challenges to state taxation schem es: paym ent under Louisiana's paym entunder-protest statute and a refund suit in state court. As the Fifth Circuit has repeatedly held, these procedures provide an adequate m eans of asserting constitutional claim s in Louisiana courts. See W ashington, 424 F. App'x at 310 ; ANR Pipeline, 646 F.3d at 947; MRT Expl. Co. v. McN am ara, 731 F.2d 260 , 263 n. 5 (5th Cir. 1984) ("[T]he Louisiana refund procedure provides taxpayers with a plain, speedy, and efficient rem edy in the Louisiana courts."). Indeed, plaintiff has exercised these rem edies by paying the disputed sales tax assessment under protest and filing suit against J efferson Parish in state court. As of the tim e plaintiff filed this lawsuit, its state-court case rem ained pending in the 24th J udicial District Court for J efferson Parish. "That [plaintiff] has taken advantage of Louisiana's system for challenging unconstitutional taxation is enough to defeat subject-m atter jurisdiction . . . ." ANR Pipeline, 646 F.3d at 947. To resist this conclusion, plaintiff argues that its state-court lawsuit against J efferson Parish is an inadequate rem edy because plaintiff has been unable to consolidate its tax claim s against other parishes and m unicipalities in that proceeding. Plaintiff contends that without a federal lawsuit, it will be forced to litigate its claim s against other parishes and m unicipalities in 7 m ultiple state-court proceedings--an arrangem ent that plaintiff argues is not "com m ercially reasonable." As an initial m atter, plaintiff's pleadings drain som e force from its argum ent. Although plaintiff argues that it cannot receive an adequate rem edy unless all of the parishes and m unicipalities in which it does business can be joined in a single suit, the only defendants nam ed in plaintiff's federal com plaint are J efferson Parish and its sheriff. Setting this incongruity aside, that plaintiff's have been unsuccessful in consolidating m ultiple tax disputes in the 24th J udicial District Court does not m ean that the rem edy available in that court is not "plain, speedy, and efficient." 28 U.S.C. § 1341. As noted, plaintiff is not entitled to "the best of all rem edies" but a rem edy that is "adequate" or "not unduly burdensom e." ANR Pipeline, 646 F.3d 948. While challenging tax assessm ents in a handful of parishes in Southeast Louisiana m ight not be the m ost efficient m ethod of resolving plaintiff's disputes, it is not so inefficient as to constitute an inadequate rem edy under the m eaning of Section 1341. See id. (finding state-court rem edy adequate when plaintiff was required to challenge individual tax assessm ents in twenty parishes).16 16 The cases that plaintiff cites against this conclusion are inapposite, as both involved facts very different from this case and neither discussed discrim inatory taxation or the Tax Injunction Act. See Niagara Mohaw k Pow er Corp. v. Hudson River-Black River Regulating Dist., 673 F.3d 84, 10 1 (2d Cir. 20 12) (finding district court abused its discretion by abstaining under Colorado River from energy utility's 8 Plaintiff also argues that federal jurisdiction is warranted because of "the equal protection issue" in this case 17--an apparent reference to plaintiff's allegation that J efferson Parish singled out plaintiff for discrim inatory tax treatm ent as retribution for plaintiff's success against the Parish in a prior lawsuit. Plaintiff has not alleged any facts suggesting that Louisiana state courts are incapable of protecting plaintiff's constitutional rights. See W ashington II, 424 F. App'x at 310 ("We decline to presum e the Louisiana courts would not adequately protect [a taxpayer's] federal rights."); cf. Sm ith, 968 F.2d at 456 (noting that "the taxpayers have not dem onstrated that the state courts have refused to entertain their federal claim in their pending state court actions"). In sum , the relief that plaintiff seeks in this case would disrupt Louisiana's tax adm inistration, and a plain, speedy and efficient rem edy is available in state court. Accordingly, the Tax Injunction Act precludes this Court from exercising jurisdiction over this case. constitutional challenges to state's authority to assess it for costs associated with operating and m aintaining dam s); Alba v. Montford, 517 F.3d 1249, 1254 (11th Cir. 20 0 8) (holding that the existence of a state rem edy precludes finding an im plied right of action for dam ages against federal officials under Bivens). 17 R. Doc. 11 at 8-9. 9 IV. CON CLU SION For the foregoing reasons, the Court GRANTS defendants' m otion to dism iss for lack of jurisdiction. 7th New Orleans, Louisiana, this _ _ _ day of April, 20 16. _______________________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 10
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