Rooker-Feldman Doctrine Deprives Federal Court of Jurisdiction When the Gravamen of the Complaint is That a State Court Order Was Erroneous

Posted on January 27, 2009 by Michael Rigney

JOHNSON v. ORR (December 04, 2008)

David Johnson obtained a certificate of purchase for a tax-delinquent piece of land in Cook County (the “County”). The certificate allowed him to acquire the property by following certain notice requirements and by then petitioning the court. He complied with the notice requirements. Before he petitioned the court, the County realized that its determination of delinquency was in error. The County and Johnson agreed to an order, entered by the court, declaring the tax sale in error and directing the cancellation of the certificate and return of the purchase price. Notwithstanding the order, Johnson petitioned the state court for a deed. Johnson later filed suit in federal court. He alleged that the County’s failure to issue the deed violated his constitutional rights and the Interstate Land Sales Full Disclosure Act, as well as various other state statutory and common laws. The court granted defendant’s motion to dismiss, ruling that the complaint sought review of a state court decision in violation of the Rooker-Feldman doctrine and that jurisdiction was barred by the Tax Injunction Act (“TIA”). Johnson appeals.

In their opinion, Judges Ripple, Evans and Tinder affirmed. The Court first addressed the Rooker-Feldman doctrine. That doctrine deprives federal courts (except the Supreme Court) of jurisdiction to hear a party complain about the effects of a state court judgment. Although Johnson attempted to style his request for relief as something other than an attack on the state court judgment, the Court looked beyond the complaint to identify the actual injury. Johnson’s injury, the state court’s failure to grant him a tax deed, comes directly from the order entered by the court canceling the certificate. The gravamen of his complaint is that the court’s order was erroneous. The district court therefore lacked subject matter jurisdiction of Johnson’s constitutional claims. Johnson also alleged a violation of the Interstate Land Sales Full Disclosure Act (the “Act”), a federal statute. Although a claim pursuant to a federal statute would normally provide subject matter jurisdiction, the Court stated that such a claim should be dismissed if it is “wholly insubstantial and frivolous.” The Court concluded that Johnson’s claim was just that. The Act applies only to sales of real estate. Here, the County did not sell the property and Johnson did not buy the property. Even if there was a sale, the Court observed that the Act would not apply because it contains an exemption for a sale by a government body. Although it did not have to, the Court did briefly address the TIA issue. It disagreed with the district court’s conclusion that the TIA applied. The TIA only applies where the relief requested would reduce the State’s tax benefit or impede the collection of taxes. The Court found neither present in the case.
 

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Tax Injunction Act Bars Federal Jurisdiction of Federal Constitutional Challenge of State Tax

Posted on December 8, 2008 by Michael Rigney

SCOTT AIR FORCE BASE PROPERTIES, LLC v. COUNTY OF ST. CLAIR (November 14, 2008)

Scott Air Force Base Properties, LLC (“Scott”) entered into a 50-year lease with the United States for property located on Scott Air Force Base. The lease was entered into pursuant to the Military Housing Privatization Initiative (“MHPI”), under which private companies can lease military land for the purposes of constructing, maintaining, and operating rental housing for military personnel. The County of St. Clair, in which the property is located, added the leaseholds to its tax rolls and assessed an ad valorem tax on each parcel. Scott filed a suit for a declaratory judgment that the leasehold interest and all transactions under the MHPI were exempt from state taxation. Scott asserted that the assessment violated the U.S. Constitution, federal law, and state law. The district court dismissed for lack of subject matter jurisdiction because of the Tax Injunction Act (“TIA”). Scott appeals.

In their opinion, Judges Ripple, Manion, and Sykes affirmed. The Court stated that the TIA bars federal jurisdiction of any suit in which the relief sought would reduce state tax revenue. It prevents both injunctive and declaratory relief. It applies even where the basis of the relief sought is a constitutional claim. The bar is expressly conditioned, added the Court, on the availability of a “plain, speedy, and efficient remedy” in state court. Scott has the burden of demonstrating the failure of the state remedy under the TIA test. Here, the Court found that Scott was clearly seeking to avoid paying state taxes. The TIA applied unless an adequate remedy was not available to Scott in the Illinois courts. Scott only challenged the “efficiency” of the Illinois remedy. Scott asserts that the Illinois remedy does not meet the TIA test because it requires that Scott pursue both an exemption application and a valuation protest. The Court rejected the argument, while conceding that a more efficient procedure might exist than the one provided by Illinois. The TIA does not require the most efficient remedy. The Court also noted that Scott will be able to raise its constitutional and federal statutory challenges to the tax in state court. Given a remedy in state court that meets the TIA test, the Court agreed that it lacked subject matter jurisdiction.

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