Appeal from the Superior Court of the District of Columbia. (CVT-8351-04) (Hon. A. Franklin Burgess, Jr., Trial Judge).
Before SCHWELB, REID and FISHER, Associate Judges.
In this class action, appellants challenge the District of Columbia's 2005 tax assessment of certain residential properties which contain lead contamination in pipes conveying water to their homes. They seek to invalidate the 2005 assessment. We must first determine, however, whether the District's Anti-Injunction Act, D.C. Code § 47-3307 (2001) -- which provides that "[n]o suit shall be filed to enjoin the assessment or collection by the District of Columbia or any of its officers, agents, or employees of any tax" -- bars appellants' action.
The trial court orally granted the District's motion to dismiss the case. In response to appellants' motion for reconsideration, the trial court issued a thoughtful written memorandum and order, denying the motion for reconsideration. In that memorandum and order the court not only reviewed and focused on three of our past decisions interpreting § 47-3307, but also placed those decisions in the context of pertinent federal Anti-Injunction Act cases decided by the Supreme Court of the United States. Contrary to appellants' argument in their main brief, the trial court properly interpreted our decision in District of Columbia v. Eastern Trans-Waste of Maryland, Inc., 758 A.2d 1 (D.C. 2000), and properly applied the legal principles distilled from Barry v. American Tel. & Tel. Co., 563 A.2d 1069, 1073 (D.C. 1989), as well as from Eastern Trans-Waste, and District of Columbia v. Green, 310 A.2d 848 (D.C. 1973). Furthermore, we see no reason to disturb (1) the trial court's application of those principles to the facts found in appellants' case; or (2) its consideration of the assessment factors set forth in D.C. Code § 47-820 (Supp. 2004), as well as the directive in § 47-821 (c) (concerning what information the Mayor must provide to the assessors "on a timely basis"); or (3) its reference to Firestone Tire & Rubber Co. v. County of Monterey, 272 Cal. Rptr. 745 (Cal. Ct. App. 1990), and the subsequent California decision in Mola Dev. Corp. v. Orange County Assessment Appeals Bd. No. 2, 95 Cal. Rptr. 2d 546 (Cal. Ct. App. 2000); or (4) its analysis of the irreparable injury requirement. Discerning no error, we affirm the judgment of the trial court, and incorporate the trial court's Memorandum and Order, dated February 1, 2005.
SUPERIOR COURT OF THE DISTRICT OF COLUMBIA TAX DIVISION
Before the Court are Petitioners Motion for Reconsideration, the opposition, and the reply.
A. The Standard for Determining the Petition
Petitioners argue that the Court erred in concluding that "extraordinary circumstances" are to be determined under the standard set forth in Enochs v. Williams Packing & Navigation Co., 370 U.S. 1 (1962), and Barry v. American Tel. & Tel. Co., 563 A.2d 1069, 1073 (D.C. 1989). The Court is of the opinion that it applied the correct standard to this case, as the Court will now attempt to explain.
D.C. Code § 47-3307 provides: "No suit shall be filed to enjoin the assessment or collection by the District of Columbia or any of its officers, agents, or employees of any tax." The petitioners do not dispute that this statute applies to the present action. The plain language of the statute admits of no exceptions. Nevertheless, our Court of Appeals, following the lead of the United States Supreme Court in interpreting a federal statute with similarly clear language*fn1 , has created a limited exception to this absolute prohibition.
In District of Columbia v. Green, 310 A.2d 848 (1973), the first case in which the Court of Appeals had occasion to apply the District of Columbia statute, the court relied on Miller v. Standard Nut Margarine Co., 284 U.S. 498 (1932), in "pointing out" that the trial court had found "the facts of this case to be so exceptional and extraordinary as to merit equitable relief." The court quoted Standard Nut as follows:
[W]here complainant shows that in addition to the illegality of an exaction in the guise of a tax there exist special and extraordinary circumstances sufficient to bring the case within some acknowledged head of equity jurisprudence, a suit may be maintained to enjoin the collector . . . .
310 A.2d at 852 (quoting 284 U.S. at 509). The "special and extraordinary circumstances" found by the trial court in Green were that the taxing authorities, deceitfully, did not inform the petitioning taxpayers that the level of their assessments had been changed until after the time by which they could have pursued an administrative remedy, thereby rendering their administrative remedy "useless." Id. at 852-53. Green thus appears to hold that the court has jurisdiction to entertain a suit for an injunction against the assessment of a tax where the assessment is both invalid and the taxpaying plaintiffs have had no administrative remedy by which to challenge the tax.
In relying on Standard Nut and, in addition, Allen v. Regents of Univ. Sys., 304 U.S. 439 (1938), the court in Green failed to mention Williams Packing, supra, decided after Standard Nut. In Williams Packing, the court concluded that not only must a plaintiff seeking an injunction show the inadequacy of a legal remedy, he must also show that "under no circumstances could the Government ultimately prevail." 310 U.S. at 7. The court made clear the policy underlying this standard. The government is entitled to the prompt collection of taxes. The purpose of the anti-injunction statute is to preserve this right by prohibiting a court from interfering with the collection of taxes, requiring the determination of the legality of the tax to be determined in a refund suit. Id. But if it is clear that "under no circumstances" could the government prevail in a refund suit, the purposes of the anti-injunction statute would not be served by declining jurisdiction, if equity jurisdiction otherwise exists. For in that instance, the "exaction is merely in 'the guise of a tax'." Id. (quoting Standard Nut, 284 U.S. at 509). The court concluded:
We believe that the question of whether the Government has a chance of ultimately prevailing is to be determined on the basis of the information available to it at the time of suit. Only if it is then apparent that, under the most liberal view of the law and the facts, the United States cannot establish its claim, may the suit for an injunction be maintained. Otherwise, the District Court is without jurisdiction, and the complaint must be dismissed. To require more than good faith on the part of the Government would unduly interfere with a collateral objective of the Act --protection of the collector from litigation pending a suit for refund. And to permit even the maintenance of a suit in which an injunction could issue only after the taxpayer's non-liability had been conclusively established might "in every practical sense operate to suspend collection of the . . . taxes until the litigation is ended." Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 299 Thus, in general, the Act prohibits suits for injunctions barring the collection of federal taxes when the collecting officers have made the assessment and claim that it is valid. Snyder v. Marks, 109 U.S. 189, 194. Id. at 7-8.
In Bob Jones Univ. v. Simon, 416 U.S. 725 (1974), the Court comprehensively reviewed its prior interpretations of the anti-injunction statute. It pointed out that during the first half-century of the existence of the statute, "the Court gave it literal force, without regard to the character of the tax, the nature of the pre-enforcement challenge to it, or the status of the plaintiff." Id. at 742 (citations omitted). Although dicta and holdings in some cases suggested that there might be extraordinary circumstances permitting a departure from a literal interpretation, the court limited those departures to special circumstances outside the pre-enforcement context. Thus, "the Court's first departure from a literal reading of the act produced a prompt correction in course." Id. at 743 (citing Graham v. DuPont, 262 U.S. 234 (1923)).
The court in Bob Jones then discussed Standard Nut and Allen, supra, which followed Standard Nut. Standard Nut, according to the court in Bob Jones, set forth a "new definition of the extraordinary and exceptional circumstances test." Under the new interpretation, which virtually equated those circumstances to long-held equity doctrine, "the concept of extraordinary and exceptional circumstances was reduced to the traditional equitable requirements for the issuance of an injunction." Id. at 744. Standard Nut was thus a "significant deviation from precedent . . . [;] it effectively repealed the Act," if read literally, and "led directly to the Court's reexamination of the requirements of the Act in Williams Packing, the second time the court has undertaken to rehabilitate the Act following debilitating departures from its explicit language." Id. at 744-45.
Williams Packing switched the focus of the extraordinary and exceptional circumstances test from a showing of the degree of harm to the plaintiff absent an injunction to the requirement that it be established that the Service's action is plainly without a legal basis. The court in essence read Standard Nut not as an instance of ...