Appeals from the Superior Court of the District of Columbia (CVT8112-02 & CVT8141-02) (Hon. Eugene N. Hamilton, Trial Judge).
The opinion of the court was delivered by: Thompson, Associate Judge
Before WASHINGTON, Chief Judge, THOMPSON, Associate Judge, and KERN, Senior Judge.
These consolidated appeals are from decisions of the Superior Court Tax Division (the "Tax Division") in two certified class actions in which the court entered summary judgment against respondents/appellants the District of Columbia and several District officials (together, "the District").*fn1 In Case No. 06-TX-177, petitioner/appellee Peter Craig sued on behalf of a class of taxpayers owning Class 1 (i.e., residential) properties in a section of the District designated for real property tax purposes as Triennial Group I, to invalidate the District's real property tax assessments for tax year 2002. As relief, Craig asked the Tax Division to "find that the assessments . . . of Class 1 properties in former Triennial Group I, made in 2001 for Tax Year 2002 . . . are arbitrary, capricious and contrary to law and the Constitution and are hence void," to order the District to "reinstate the assessments effective for Tax Year 2001," and to "refund for Tax Year 2002 to each [class] member . . . the difference . . . between the taxes paid on the assessments voided herein" and the 2001 tax assessment. In Case No. 06-TX-178, petitioners Polly Ernst and Margot Hahn brought a similar action on behalf of a "class in formation," challenging assessments for tax years 2002 and 2003, which suit the Tax Division consolidated with Craig as to claims regarding tax year 2002 assessments.*fn2
On September 23, 2005, the Tax Division entered an order in Craig concluding that "the assessments made by [the District] for Class 1 residential properties in Triennial Group I for Tax Year 2002 are arbitrary, capricious, and [an] abuse of discretion, and otherwise not in conformity with the Constitution of the United States or the law of the District of Columbia, and are, therefore, void." The court ordered the District to "make refunds . . . to all owners of Class 1 residential properties in Triennial Group I who were finally assessed at a higher level in tax year 2002 than in tax year 2001 and who paid taxes on such higher assessment." On November 10, 2005, the court ordered similar relief in the consolidated portion of Ernst.
The District appellants contend that the Tax Division lacked jurisdiction to entertain the class action suits and to award the declaratory and injunctive relief that it ordered. The District also urges that, even assuming that the Tax Division had jurisdiction, the court erred in granting summary judgment to the petitioners/appellees. We agree, and therefore vacate the class certification order and injunction, reverse the Tax Division's summary judgment ruling, and remand.
I. Factual and Procedural Background
The primary objective of real property taxation in the District of Columbia is to ensure "[e]quitable sharing of the financial burden of the government . . . ." D.C. Code § 47-801 (1). Under the statutory scheme, a rate of taxation established by the D.C. Council is applied to the "assessed value" of all real property subject to taxation. D.C. Code § 47-812 (a). The dispute in these appeals relates to the methodology that the District used to arrive at the assessed value of so-called Triennial Group I residential properties for tax year 2002.
D.C. Code § 47-820 (a)(3) provides that the "assessed value for all real property shall be the estimated market value of such property" on the relevant date, "as determined by the Mayor." "Estimated market value" is defined as "the most probable price at which a particular piece of real property . . . would be expected to transfer under prevailing market conditions" between parties dealing at arm's length. D.C. Code § 47-802 (4). The Mayor may make assessments "manually or through the use of an automated system or systems such as the Computer-Assisted Mass Appraisal System," D.C. Code § 47-820 (a)(3), and is required annually to compile an estimated assessment roll listing the assessed value of all real property as of the valuation date. See D.C. Code § 47-820 (a)(1). Estimated assessments are subject to appeal under D.C. Code § 47-825.01 (f-1), which provides for a first-level administrative review (to the Office of Tax and Revenue, "OTR") (see D.C. Code § 47-825.01 (f-1)(1) (A) & (B)), which review may be followed by an appeal to the Board of Real Property Assessments and Appeals ("BRPAA") (see D.C. Code § 47-825.01 (f-1)(2)) and thereafter to the Superior Court. See D.C. Code § 47-825.01 (j-1). The Tax Division has exclusive jurisdiction of "all appeals from and petitions for review of assessments of tax . . . made by the District of Columbia." D.C. Code § 11-1201 (1).
Beginning in tax year 1999, the District began a triennial assessment system under which (subject to certain exceptions) all real property was assessed at least once every three years. See D.C. Code § 47-820 (b-1)(1). Under the short-lived triennial system, each lot was assigned to one of three "Triennial Groups." For Triennial Group I, the assessed value for tax year 1999, based on valuation as of January 1, 1998, remained in effect for tax years 2000 and 2001 as well.*fn3 Beginning with tax year 2002, each property that had completed a three-year cycle was returned to annual revaluation. See D.C. Code § 47-820 (b-2). Accordingly, Class 1 properties in Triennial Group I (including the property of petitioner/appellee Craig and the certified class he represents) were reassessed for tax year 2002, based on valuation as of January 1, 2001.*fn4
To determine proposed assessments for Triennial Group I residential properties (other than condominiums) for tax year 2002, OTR developed an across-the-board multiplier for each neighborhood or subneighborhood (the "neighborhood multiplier"). Each property's proposed assessment for tax year 2002 was the product of the applicable neighborhood multiplier and the property's prior (tax year 1999) assessed value. The dispute before us pertains to the methodology by which OTR developed the neighborhood multipliers.
Roughly described, the methodology entailed identifying properties in each Triennial Group I neighborhood that sold during calendar year 1999 or 2000; determining a ratio of each such property's tax year 1999 assessed value to the property's calendar year 1999 or 2000 sales price (the property's "assessment-sales ratio"); arraying the ratios from lowest to highest and identifying the median; expressing the reciprocal of the median ratio; designating the reciprocal as the neighborhood multiplier; and applying the neighborhood multiplier to the previous assessed value of each property. OTR Director Henry Riley explained that the foregoing methodology, which OTR refers to as a "trending methodology," was intended to capture the steady growth in value in the District real estate market. According to Mr. Riley, the methodology was an efficient application of OTR's limited resources and manpower to ascertain market value.
Using the trending methodology, OTR applied a multiplier of 1.492 to the previous assessed value of each residential property in the District neighborhood known as Cleveland Park to arrive at proposed tax year 2002 assessments. As a result, appellee Craig's tax year 1999 assessment of $401,529 for his property at 3406 Macomb Street, N.W., was multiplied by 1.492 to reach a proposed tax year 2002 assessment of $599,081. Neighborhood multipliers for neighborhoods in Triennial Group I ranged from the high of 1.492 for Cleveland Park to a low of .973 for Congress Heights.
On April 27, 2001, OTR mailed notices of the proposed tax year 2002 assessments to Triennial Group I property owners. Responding to the notice he received, petitioner Craig requested that OTR administratively review his proposed assessment. After OTR declined to reduce the assessment, Craig appealed to the BRPAA, contending that the proposed assessment exceeded his property's market value and also that OTR's trending methodology created systemic errors -- i.e., resulted in some properties being over-assessed and others being under-assessed -- thereby, Craig argued, violating both District law and the United States Constitution. Asserting that there had been no material improvements to his property since 1957 and that his house had interior damage because of a leaky roof, Craig asked the BRPAA to roll back his own assessment from the proposed assessed value of $599,081 to the prior assessed level of $401,529, or at least to his property's actual market value, which Craig claimed was $460,537. He also asked the BRPAA to roll back the assessments for all residential properties in Cleveland Park to their previous assessment levels unless and until the District made new "lawful" assessments. A number of other Cleveland Park residential property owners also filed appeals with OTR and then the BRPAA. The BRPAA held a hearing on common issues.*fn5
The BRPAA concluded that the District's assessment methodology was consistent with the broad discretion given the Mayor and Deputy Chief Financial Officer by the governing statute and regulations, but that the methodology had produced a flawed result as to Craig's property. The BRPAA therefore decreased Craig's assessment to $513,000. Craig then filed suit in the Tax Division, seeking to set aside the tax year 2002 assessments for properties in Triennial Group I, including properties whose owners had not sought administrative review of their proposed assessments. Craig sued on behalf of himself, the named owners of forty-three other properties in Triennial Group I, and a class of other property owners, all of whom he asserted had paid all taxes that had been billed. The petition asked the court "to set aside and correct unlawful and unconstitutional real property tax assessments levied" on residential properties in Triennial Group I for tax year 2002 and to order the District to refund the overpayment amounts. The Ernst petition sought similar relief.
The District moved to dismiss the petitions for lack of jurisdiction, except as to the named petitioners who had satisfied the statutory jurisdictional prerequisites for appeal to the Superior Court by pursuing individual appeals to OTR and the BRPAA. The District also opposed certification of the petitions as class actions and sought to require any qualifying named petitioners to litigate their cases separately.
The Tax Division denied the District's motions to dismiss as to any petitioners who had not appealed to the BRPAA, declined to sever the case into individual proceedings and certified a class described as follows:
[T]he owners of Class 1 residential real properties located in the District of Columbia in neighborhoods encompassed in former Triennial Group 1, as defined by the Office of Tax and Revenue of the District of Columbia, with respect to real property assessments and taxes levied for tax year 2002, where such taxes and all penalties have been previously paid. . . . Such class includes only those real property owners who were adversely affected by the use of the alleged unlawful assessment methodology.
June 11, 2003 Memorandum Order (underscoring in the original). The court's certification order states that the class consists of approximately 35,000 persons.
Thereafter, the court denied the District's motion for summary judgment and granted judgment to appellees as to the tax year 2002 assessments. The court held that the District's assessment method for TY 2002 resulted in "widespread discrimination, generally in favor of more expensive property to the detriment of middle-priced and low-prices [sic] residential properties [and the] Respondents knew or should have known of this discrimination, but willfully, knowingly, intentionally and deliberately used this process to determine TY 2002 real property tax assessment[s] for Triennial Group 1 residential properties." The court also ruled that trending "should have been subject to rulemaking under the DCAPA [District of Columbia Administrative Procedure Act]." The court further concluded that the District's tax year 2002 assessment notices "intentionally and deliberately failed to comply with the requirements of the D.C. Code" and the "elementary rights of due process under the Constitution . . . depriving taxpayers of information necessary to exercise [the] right of appeal." The court issued a final order granting a refund, with interest, to each class member who suffered a tax increase resulting from the across-the-board adjustments in assessments for tax year 2002. The court stayed its order pending these appeals.
A. The Action on Behalf of Taxpayers Who Had Not Pursued Their Administrative Remedies, and the Relief That the Court Awarded, Violated the District's Anti-Injunction Act
"[T]axes are the life-blood of government, and their prompt and certain availability an imperious need." Bull v. United States, 295 U.S. 247, 259 (1935). This principle is reflected in the District of Columbia Anti-Injunction Act, D.C. Code § 47-3307,*fn6 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." Our case law establishes that the Anti-Injunction Act prohibition "precludes declaratory as well as injunctive relief." District of Columbia v. United Jewish Appeal Fed'n, supra note 6, 672 A.2d at 1079; see also Barry v. Am. Tel. & Tel. Co., 563 A.2d 1069, 1073 (D.C. 1989). To state this limitation in the affirmative, the Anti-Injunction Act requires that "the determination of the legality of [a] tax  be determined in a refund suit." Tolu v. District of Columbia, 906 A.2d 265, 267 (D.C. 2006). Outside the context of a tax refund suit, a plaintiff seeking declaratory or injunctive relief from a tax assessment can avoid the Anti-Injunction Act bar only by showing that two criteria are met: that there is no adequate legal remedy, and that "'under no circumstances could the Government ultimately prevail.'" Id. at 267 (quoting Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 7 (1962)).*fn7
Both the Craig and Ernst petitioners' prayers for relief and the class-wide relief that the Tax Division awarded leave no question that the petitions were suits for declaratory and injunctive relief within the meaning of the Anti-Injunction Act. Accordingly, the Tax Division was without jurisdiction to entertain the petitions unless the suits were tax refund suits, or unless the suits satisfied the two criteria for an exception to the Anti-Injunction Act.
1. As to Most Members of the Certified Class, The Petitions Were Not Refund Suits
The Tax Division was careful to limit class membership to property owners who had paid their tax year 2002 taxes and were seeking court-ordered refunds. In that sense, these class actions were suits for refunds. We hold, however, that as to most members of the certified class, the suits were not actually "refund ...