Petition for Writ of Certiorari — Wheeling College, Inc. v. City of Wheeling

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Supreme Court, U.&

ASee &

B 81728 APR 9 1999

In The

Supreme Court of the United States

October Term, 1998

WHEELING COLLEGE, INC., A West Virginia

corporation, THE MOST REVEREND BERNARD W

SCHMITT, Bishop of the Roman Catholic

Diocese of Wheeling-Charleston, and

THE OHIO COUNTY BOARD OF EDUCATION,

Petitioners

THE CITY OF WHEELING, WEST VIRGINIA,

a municipal corporation,

Respondent

——— _¢ sriaeeneeeteaquecnnnmnenenass

On Petition For Writ Of Certiorari

To The Supreme Court Of Appeals Of West Virginia

—_ € a

PETITION FOR WRIT OF CERTIORARI

cummesemes e—

Currorp B. Levine, Eso.

Counsel of Record

Stuart C. GAut, Jr.

THorp, Reep & ARMSTRONG, LLP

One Riverfront Center

Pittsburgh, PA 15222

(412) 394-7711

{Additional Counsel Listed On Inside Front Cover]

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 442-2831

JOHN Preston BaILey

Harry L. Bucw

Baicey Ricey Buc & HARMAN

Riley Building, Suite 900

P.O. Box 631

Wheeling, WV 26003

(304) 2 3? 6675

lames C. GaArpbIt

Pritups, GaArpitt, Kaiser & ALTMEY!

61 Fourteenth Street

Wheeling, WV 26003

(304) 232-6810

}AMES F. COMPANION

SCHRADER, Byrp & COMPANION

The Maxwell Centre

32 20th Street, Suite 500

P.O. Box 6336

Wheeling, WV 26003

(304) 233-3390

(

QUESTIONS PRESENTED FOR REVIEW

1. Whether the Supreme Court of Appeals of West

Virginia and the Circuit Court of Ohio County, West

Virginia, as state courts of competent jurisdiction, erred

in not following the holding of this Court in Howlett v.

Rose, 496 U.S. 356 (1990) by not hea_ing and determining

issues presented to them that arose under the U.S. Consti-

tution.

2. Whether the Supreme Court of Appeals of West

Virginia erred in not following the holding of the U.S.

Court of Appeals for the Fourth Circuit in Folio v. City of

Clarksburg, 134 F.3d 1211 (4th Cir. 1998) and United States

v. City of Huntington, 999 F.2d 71 (1993), cert. denied, 510

U.S. 1109 (1994) that, for purposes of federal law, the Fire

Services Fee imposed by the City of Wheeling, West Vir-

ginia on all owners of real property within the City is a

tax.

3. Whether the Supreme Court of Appeals of West

Virginia erred in disregarding this Court’s decision in

Allegheny-Pittsburgh Coal Co., Inc. v. Webster County, West

Virginia, 488 U.S. 336 (1989) in not holding that the City of

Wheeling violated the Equal Protection Clause of the

Fourteenth Amendment by attempting to assess a prop-

erty tax against the Petitioners where the federal govern-

ment was not obligated to pay the tax and the applicable

state statute, W. Va. Code Section 11-3-9, placed bo 4 the

Petitioners and the federal government in the same class

of property owners wholly exempt from taxation on

property.

QUESTIONS PRESENTED FOR REVIEW - Continued

4. Whether the Supreme Court of Appeals of West

Virginia erred in disregarding this Court’s decision in

Allegheny-Pittsburgh Coal Co., Inc. v. Webster County, West

Virginia, 488 U.S. 336 (1989) in not holding that the City of

Wheeling violated the Equal Protection Clause of the

Fourteenth Amendment by disregarding Article X, Sec-

tion 1 of the West Virginia Constitution and levying a tax

on property on bases other than assessed valuation.

ill

LIST OF PARTIES BELOW

The following persons or entities were parties to the

actions reviewed by the Supreme Court of Appeals of

West Virginia in City of Clarksburg v. Grandeotto, Inc., __

W. Va. > —.. SESS... (I9SSh:

Wheeling College, Inc., a West Virginia corporation

The Most Reverend Bernard W. Schmitt, Bishop of

the Roman Catholic Diocese of Wheeling-Charleston

Ohio County, West Virginia Board of Education

City of Wheeling, West Virginia, a municipal corporation

City of Huntington, West Virginia, a municipal cor-

poration

City of Clarksburg, West Virginia, a municipal corpo-

ration

Mid-City Land Company

Grandeotto, Inc.

Bernard J. and Kathy A. Folio

Bernard J. Folio d/b/a Highrise Associates

Kathryn Folio

Joseph Folio

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW ........... i

Boyet Bo eri Bt oS eer Pr renmrer iii

TABU Ge BAF 0 ks Ci Sides et iasusacccests vi

PE. INE 5 bers eas 6 heroes) bobs Coren ks 1

STATEMENT OF JURISDICTION. 00.050 sscedeswsi 1

CONSTITUTIONAL PROVISIONS, STATUTES AND

ORDENANCES INVOLVED och ccdcedscneyweesses 1

STATROEGRCE GA THE GAGE. 56 icc iiecte dsc ciesiaee 4

A, . PCR BCI io ons cen rei gesnsusensas 4

2. FR POC iss Conese dat pexnciiseis cise 4

2. West Virginia’s Statutory Exemption From

Ee Err rE ere err eer ree rey fort 5

3. The City of Wheeling’s Assessment for Fire

gE anes an gener er ayer ee inp 6

E. PGIE THE opacities ses petenesseeaes 7

1. Proceedings in the Circuit Court of Ohio

Commie, VERGE. VIPMIONR os 5 ook auch bs snees ees 7

2. Petition for Appeal to the Supreme Court of

Aaa OF FORE VIER iis caviaces des 8

3. The Decision of the Supreme Court of

PEP eer ree Le ry nr ree 10

4. Motion for Reconsideration................. 11

REASONS FOR GRANTING THE WRIT ........... 12

A. In Not Addressing and Resolving the Petitioners’

Assignments of Error Arising Under the U.S.

Constitution, the Supreme Court of Appeals

Overlooked the Clear Teachings of this Court.. 13

TABLE Ox CONTENTS - Continued

Page

B. To the Extent, if Any, than the Supreme Court of

Appeals Addressed the Constitutional Issues

Raised by the Petitioners, It Created a Conflict

with the Decisions of the U.S. Court of Appeals

for the Fourth Circuit by Deciding that the Fire

Charge is a User Fee, Rather than a Tax, for

PUSPIORR OF FOGUINE TAG bas 5 ics is ca ccryconene 21

1. Under the Supremacy Clause, the Question of

Whether the Fire Charge is a “Tax” for Pur-

poses of the Equal Protection Clause is to be

Determined by Reference to Federal Law... 21

2. The U.S. Court of Appeals for the Fourth

Circuit Has Held that a Municipal “Fee” Lev-

ied Against All Owners of Real Property is a

Tax and not a “User Fee” for Purposes of

WOE RW oss Ga Ci oki ee chee ce teeoeeeaens 23

C. The Supreme Court of Appeals Acted Contrary

to the Teachings of this Court when it Failed to

Hold that the City’s Application of the Charge to

Real Property Owned by the Petitioners Violated

the Petitioners’ Rights Under the Equal Protec-

tion Clause of the U.S. Constitution ........... 24

1. The Law of West Virginia Does Not Distin-

guish Between the Property Owned by the

Petitioners and Property Owned by Entities

of the Federal Government in Any Manner

That Would Allow the City to Assess the Fire

Charge Against One But Not the Other.... 26

2. The City’s Levying of the Fire Charge on a

Basis Other than Assessed Value Violates the

Equal Protection Clause in the Same Manner

as the Purchase Value System Challenged in

Allegheny Pittsburgh Coal ............000005: 28

COVA RES ks he bec ae Ch owen OX eco we eee sieees 29

fe gg, | Sp eee mie per Op aRM pee eet App. 1

TABLE OF AUTHORITIES

Page .

Cases

Allegheny Pittsburgh Coal Co., Inc. v. County Com-

missioners of Webster County, West Virginia, 488

UG. See CEE sean cnciscccnbeds be Sanaeewanres passim

Arbogast v. Arbogast, 174 W. Va. 498, 327 S.E.2d 675

(BOGE). aiikis Vd vd aes a teky Okan a ee ee 14

Burris v. City of Little Rock, 941 F.2d 717 (8th Cir.

1GFT) «i. vc vee cvns aoec eee peecues Wand eeenece O45 24

Capitol Cablevision Corp. v. Hardesty, 168 W. Va.

631, 265 S.B.2e GER CURE) 0 sks i enn Glee aees 15

Carpenter v. Shaw, 280 U.S. 363 (1930)..............- 21

Central Realty Co. v. Martin, 126 W. Va. 915, 30

S.B.20 Fa0. CAPO) ois ov cdieacete seen ers hiabeeae 15

City of Clarksburg v. Grandeotto, Inc., __. W. Va. __,

ints PRATT ise EE Ws ROD AS ae Rane i, 9, 10, 11

City of Fairmont v. Pitrolo Pontiac-Cadillac Co., 172

W. Va. 505, 308 S.E.2d 527 (1983), cert. denied,

466 US: S56 IGG) 0 os oiled iwadee dome tinsasseers 28

City of Huntington v. Bacon, 196 W. Va. 457 S.E.2d

ZED CVE Wer TO ies i vn seb ee eka a, Fy 40, 13,. 36

Clafin v. Houseman, 93 U.S. 130 (1876)............... 18

Collins Holding Corp. v. Jasper County, South Caro-

lina, 123: FSd 797 (4Gs. Cle. THT) i co seeks caste cen 23

Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938) ..... 13

Felder v. Casey, 487 U.S. 131 (1988)........... 13, 14, 20

Folio v. City of Clarksburg, 134 F.3d 1211 (4th Cir.

SFR sin ssc cds cenicuntqcuwevurediaeie iis 13, 16, 22, 23

rrr

——S-

Vii

TABLE OF AUTHORITIES - Continued

Page

Garrett v. Moore-McCormack, Co., 317 U.S. 239

CE iiss is cde caeceiucdl enn Ven See exgmbeasewes 14

Hare v. City of Wheeling, 171 W. Va. 284, 298 S.E.2d

NE ES vn bees wade Kae seed ees anwbaeeeen Seane 28

Hillsborough v. Cromwell, 326 U.S. 620 (1946)......... 25

Howlett v. Rose, 496 U.S. 356 (1990) ............. passim

In re 1975 Tax Assessment Against Oneida Coal, 178

W. Va. 485, 360 S.E.2d 560 (1987), rev’d sub. nom.

Allegheny Pittsburgh Coal Co. v. County Commis-

sioners of Webster County, West Virginia, 488 U.S.

DOG CII oo nikd voce cota sncbcedeneunwehs peus oa% 19, 20

Indiana Waste Sys., Inc. v. County of Porter, 787

F.Supp. 859 (N.D. Ind. 1992)........--.+-eeeee eee 24

Kentucky Union Co. v. Kentucky, 219 U.S. 140 (1911) .... 24

Metropolitan Life Insurance Co. v. Ward, 470 U.S. 869

CRT a 6 iia vB Rha eto Aus Fos ved pede rumen ts Ceedevees 25

Nordlinger v. Hahn, 505 U.S. 1 (1992)........--+-0e: 26

Public Service Comm’n of Utah v. Wycoff Co., Inc.,

Oe EE, See CHGOAN so cvkcs ses vevcesd teh dbegeees ove 14

San Juan Cellular Tel. Co. v. Public Services Comm'n,

O67 F.2a GES. Chat Cir. 199) cnn vcncgc genes ceeees 23

United States v. City of Columbia, Missouri, 914 F.2d

ie ee a, rrr rrr rer TT ttt ee 23

United States v. City of Huntington, 999 F.2d 71 (4th

Cir. 1993), cert. denied, 510 U.S. 1109 (1994)

Ses ania po beeen paeRew OMe gaeen ab 7, 10, 13, 22, 23, 24

vill

TABLE OF AUTHORITIES ~— Continued

Page

CONSTITUTIONS

te EE Se Spas Atari Meas Daina ower ge es

tS 6 Oe SE, FEE, Bok 0 os kG uae veawenn passim

W.Va: See ee PR eS ois a vives vans eQuevederenees 15

We. Va. SO ORE Via 6.6 oc bc bab cete cteceeie cence 14

A ee ge a ra tere ae 5, 25, 28

STATUTES

ie SO ge scree an 4,5

MUSE. 6. oa a ee 1

ys) PKS WE +: ee erat Sra Terr 16, 22

G2. TFS TO is nos BS Ki FAG ee 17, 18

WW. Fe, Sa SE aa ik oic Cd andend rat hadepecwedaenees 5

W.. Va. RGR © Beds 18 ow iin is a eK S by: 6; 9; Za ae

W. Va. Coge © 289 socks cetec es SD, Os Fa Or be ae

OY, Vin, Se he ion os necks os eecneseeeeivvers 15

WM Comes. kk a 14

RULES

eT oy Ee ah b Serene ron een eee a a NOE Pee PMR eC 12

ORDINANCES

Codified Ordinances of the City of Wheeling, art.

PRR as obs Vas AR RRCSES ENDOW EREN ER A ee 4, 6

OPINIONS BELOW

The opinion of the Supreme Court of Appeals of West

Virginia in City of Clarksburg v. Grandeotto, Inc. is not yet

reported in either the West Virginia Reports or West’s

Southeastern Reporter, Second Series. It is available

online on WESTLAW at 1998 WL 874967 and is reprinted

below at App. 1-19. That court’s order denying the Peti-

tioners’ petition for rehearing is also not generally

reported and is reprinted at App. 29-30.

The relevant opinion and orders of the Circuit Court

of Ohio County, West Virginia are unreported. That

Court’s August 19, 1998 Findings of Fact, Conclusions of

Law and Order granting the City of Wheeling’s motion

for summary judgment and denying the Petitioners’

cross-motion is reprinted at Appendix 20-26. Its August

28, 1998 order certifying the August 19, 1998 order as

final and appealable is reprinted at App. 27-28.

STATEMENT OF JURISDICTION

The Petitioners seek a writ of certiorari to the

Supreme Court of Appeals of West Virginia for review of

the December 14, 1998 decision of that court in City of

Clarksburg v. Grandeotto, Inc., __ W. Va. __, __ S.E.2d

__, 1998 WL 874967 (1998). That court denied the Peti-

tioners’ petition for rehearing on January 28, 1999.

| en RP

The jurisdiction of this court arises under 28 U.S.C.

§ 1257.

CONSTITUTIONAL PROVISIONS, STATUTES

AND ORDINANCES INVOLVED

U.S. CONSTITUTION, ARTICLE VI:

| This Constitution, and the Laws of the United States

which shall be made in Pursuance thereof; and all

Treaties made, or which shall be made, under the Author-

ity of the United States, shall be the supreme Law of the

Land; and the Judges in every State shall be bound

thereby, any Thing in the Constitution or Laws of any

State to the Contrary notwithstanding.

U.S. CONSTITUTION, AMENDMENT XIV, SECTION 1:

Section 1. All persons born or naturalized in the United

States, and subject to the jurisdiction thereof, are citizens

of the United States and of the State wherein they reside.

No State shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

United States; nor shall any State deprive any person of

life, liberty, or property, without due process of law; nor

deny to any person within its jurisdiction the equal pro-

tection of the laws.

WEST VIRGINIA CODE, SECTION 8-13-13:

§ 8-13-13 Special charges for municipal services.

Notwithstanding any charter provisions to the con-

trary, every municipality which furnishes any essential or

special municipal services, including, but not limited to,

police and fire protection, parking facilities on the streets

or otherwise, parks and recreational facilities, street

cleaning, street lighting, street maintenance and improve-

ment, sewerage and sewage disposal, and the collection

and disposal of garbage, refuse, waste, ashes, trash and

other similar matter, shall have plenary power and

authority to provide by ordinance for the installation,

continuance, maintenance or improvement of such ser-

vice, to make reasonable regulations with respect thereto,

and to impose by ordinance upon the users of such

service reasonable rates, fees and charges to sewerage

and sewage disposal service and any service incident to

the collection and disposal of garbage, refuse, waste,

ashes, trash and any other similar matter shall be subject

to the provision of chapter twenty-four [§ 24-1-1 et seq.],

of this code. ...

WEST VIRGINIA CODE, SECTION 11-3-9 (superseded):

All property, real and personal described in this sec-

tion, and to the extent herein limited, shall be exempt

from taxation, that is to say: Property belonging to the

United States, other than property permitted by the

United States to be taxed under state law; . . . property

belonging to, or held in trust for, colleges, seminaries,

academies and free schools, if used for educational, liter-

ary or scientific purposes, including books, apparatus,

annuities and furniture; property belonging to, or held in

trust for, colleges or universities located in West Virginia,

or any public or private nonprofit foundat _or corpora-

tion which receives contributions exclus..¢ly for such

college or university, if the property or dividends, inter-

est, rents or royalties derived therefrom are used or

devoted to educational purposes of such college or uni-

versity; . . . all real estate not exceeding one-half acre in

extent, and the buildings thereon, and used exclusively

by any college or university society as a literary hall, or

as a dormitory or clubroom, if not leased or otherwise

used with a view to profit; . . .

WEST VIRGINIA CODE, SECTION 11-3-9 (as amended):

§ 11-3-9. Property exempt from taxation

(a) All property, real and personal, described in this

subsection, and to the extent herein limited, is exempt

from taxation:

(1) Property belonging to the United States,

other than property permitted by the

United States to be taxed under state law;

+eeee

(9) Property belonging to, or held in trust for,

colleges, seminaries, academies and free

schools, if used for educational, literary or

scientific purposes, including books, appa-

ratus, annuities and furniture;

(10) Property belonging to, or held in trust for,

colleges or universities located in West Vir-

ginia, or any public or private nonprofit

foundation or corporation which receives

contributions exclusively for such college

or university, if the property or dividends,

interest, rents or royalties derived there-

from are used or devoted to educational

purposes of such college or university.

+4 +e *

CODIFIED ORDINANCES OF THE CITY OF WHEELING,

ARTICLE 793:

793.01 Legislative Purpose.

. at the charge and expense of the owners of

buildings and structures of every kind and

nature within the City, . . . which owners and

occupiers are declared to be the users and bene-

richaries . . .

793.03 Imposition of Fire Protection Charge.

(a) There is hereby imposed .. . a fire

protection fee or charge... .

STATEMENT OF THE FACTS OF THE CASE

A. Factual Background

1. The Parties

Wheeling College, Inc., now known as Wheeling

Jesuit University (“Wheeling Jesuit” or the “University”),

is a corporation that operates a religiously affiliated pri-

vate university in the City of Wheeling, West Virginia

(“Wheeling” or the “City”). It is exempt from taxation by

the federal government pursuant to section 501(c)(3) of

the Internal Revenue Code, 26 U.S.C. § 501(c)(3). It owns

real property that lies within the geographic limits of the

City.

The Most Reverend Bernard W. Schmitt (the “Bishop”

or the “Diocese”) is the bishop of the Roman Catholic

Diocese of Wheeling-Charleston, West Virginia. Among

its many activities throughout the State, the Diocese oper-

ates one high school and four elementary schools within

the City. The Diocese owns the real estate on which these

schools sit. The Diocese is also exempt from federal taxes

under 26 U.S.C. § 501(c)(3).

The Ohio County Board of Education (the “Board”)

operates free public schools throughout Ohio County,

West Virginia. Several of these schools are located within

the City. The Board is also not subject to federal taxes.

The City is a municipal corporation organized pur-

suant to Chapter 8 of the West Virginia Code, W. Va. Code

§§ 8-1-1 et seq.

2. West Virginia’s Statutory Exemption From

Taxation

Since its creation in 1863, the State of West Virginia

has continuously recognized an exemption from taxation

for certain types of real and personal property, including

property held by independent and public not-for-profit

educational institutions that is used for educational pur-

poses. This exemption applies to all non-federal taxes,

whether levied by the State itself, by counties or by

municipal corporations. The current statutory exemption

is authorized by Article X, Section 1 of the West Virginia

Constitution and is codified at section 11-3-9 of the West

Virginia Code.!

1 The West Virginia legislature amended W. Va. Code

§ 11-3-9 in 1998, while this action was pending before the Circuit

Court of Ohio County, West Virginia. Nothing in the language of

this amendment would appear to affect the resolution of this

action, and the City has never argued that it would do so. For

the convenience of this Court, both the prior and amended

versions of this section are set forth above.

'.)

As all parties agree, each of the Petitioners is exempt

under this section from any taxes levied by the City.

[here is also no dispute that this section is a lawful

exercise of the Legislature’s power under the West Vir-

ginia Constitution

3. The City of Wheeling’s Assessment for Fire

Services

Purporting to act under the authority of section

8-13-13 of the West Virginia Code, the City has enacted a

charge for the declared purpose of defraying the cost to

the City of providing fire services (the “Fire Charge”).

[he Fire Charge is codified at Article 793 of the City’s

ordinances. At all times relevant to this action, the City

has levied the Fire Charge against certain real property

within its borders and certain motor vehicles registered

to addresses in the City. Although the proceeds of the

Fire Charge are nominally earmarked for provision of

services by the City of Wheeling Fire Department, they

are deposited directly into the City’s general fund.

At no time has the amount of the Fire Charge actually

depended upon an owner or tenant’s actual use of the

services of the City of Wheeling Fire Department.

Although the rates were increased in 1993, the manner in

which the City has calculated the Charge has remained

constant throughout the period relevant to this action:

Owners of residential structures are assessed a flat

annual fee; owners of non-residential structures are

assessed an amount based upon the square footage of

their structures; tenants of all structures are assessed a

flat fee; and a flat charge is levied on motor vehicles.

Although Article 793 does not contain any exemp-

tions from the Fire Charge on its face, the City has not

levied the Fire Charge against all owners of real property

in the City in a uniform manner. Significantly, the City

does not collect the charge from the General Services

Administration (the “GSA”), the principal entity through

which the federal government owns land in the City.

Pointing to United States v. City of Huntington, 999 F.2d 71

(4th Cir. 1993), cert. denied, 510 U.S. 1109 (1994), as author-

ity, the GSA has maintained that the Fire Charge is a tax

for purposes of federal law and that the Supremacy

Clause of the U.S. Constitution precludes the states and

their subordinate entities from taxing the federal govern-

ment. In the face of this refusal, the City has not taken

any steps to collect the Fire Charge from the GSA.

B. Procedural History

1. Proceedings in the Circuit Court of Ohio

County, West Virginia

The University and the Bishop commenced their

action against the City in the Circuit Court of Ohio

County, West Virginia (the “Circuit Court”) in 1995. They

sought a declaration that the Fire Charge was in actuality

a tax from which they were exempt pursuant to section

11-3-9 of the West Virginia Code. They further argued

that, because the West Virginia Legislature had exempted

them from taxes in the same manner and to the same extent

that it had exempted the federal government, the City’s

efforts to collect the Fire Charge from them while forego-

ing any effort to collect it from the GSA violated their

rights under the Equal Protection Clause of the U.S. Con-

stitution. They argued that, because federal substantive

rules of decision clearly indicated that the Fire Charge

was a tax, and because the current enforcement scheme

would never equalize the amount that they paid with the

amounts that the federal government paid on similar

properties, the Fire Charge could not validly be applied

to them. In responding, the City filed a counterclaim

seeking approximately $200,000.00 in allegedly past due

Fire Charge.

The City instituted its collection action against the

Board in the same court in 1996, seeking payment of a

Fire Charge of more than $800,000.00. Because the Board

posited essentially the same defenses to the Fire Charge

that the Private Plaintiffs had raised in their action, the

court below consolidated the two actions. Discovery pro-

ceeded apace, and, in January 1998, the Petitioners and

the City filed cross-motions for summary judgment.

The Circuit Court granted the City’s motion by Find-

ings of Fact, Conclusions of Law and Order of August 19,

1998. Appendix at 20-26. It held that, under City of Hunt-

ington v. Bacon, 196 W. Va. 457, 473 S.E.2d 743 (1996), it

was bound to conclude that the Petitioners were autho-

rized to pay the Fire Charge. Appendix at 24-25. That

court further held that, because of the Bacon decision, it

lacked authority to consider the Petitioners’ claim that

the Fire Charge violated the U.S. Constitution. Appendix

at 24-25. By order of August 28, 1998, the court below

clarified that its August 19 order was final and could be

appealed. Appendix at 27-28.

2. Petition for Appeal to the Supreme Court of

Appeals of West Virginia

On October 7, 1998, the Petitioners jointly petitioned

the Supreme Court of Appeals of West Virginia (the

“Supreme Court of Appeals”) for appeal of the Circuit

Court’s judgment. In their petition, they offered three

assignments of error:

1. That the Circuit Court had erred in not hold-

ing that the City’s universal, involuntary

Fire Charge was a tax on property from

which the Petitioners were exempt under

Section 11-3-9 of the West Virginia Code.

That the Circuit Court had erred in conclud-

ing that this court’s decision in City of Hunt-

ington v. Bacon prevented it from considering

the Petitioners’ argument that the City’s

application of the charge to them violated

the U.S. Constitution.

3. That the Circuit Court had erred in failing to

hold that the City’s application of the Fire

Charge to the property owned in the City by

the Petitioners, but not to property owned

by the federal government, violated the Peti-

tioners’ rights under the Equal Protection

Clause of the U.S. Constitution.

The Petition for Appeal discussed each of these issues.

By Order of October 15, 1998, the Supreme Court of

Appeals granted the petition and agreed to consider the

issues presented in the Petition for Appeal. At the same

time, the Supreme Court of Appeals also granted the

Bishop’s petition for appeal in City of Huntington v.

Schmitt, which sought review of a decision of the Circuit

Court of Cabell County, West Virginia in an action pre-

senting issues that were virtually identical.2 The court

consolidated these cases for argument with City of

Clarksburg v. Grandeotto, Inc.,3 which the court had previ-

ously scheduled for argument on November 10, 1998, and

issued an expedited briefing schedule under which the

Petitioners’ petitions for appeal was to be treated as a

brief on the merits. The City filed its brief by the court’s

deadline and addressed each of the issues raised by the

Petitioners.

The Petitioners filed a consolidated Reply Brief on

November 6, 1998. In that brief, they took care to note

that, because the questions that the Supreme Court of

Appeals had agreed to consider involved both the

express reconsideration of its decision in Bacon and issues

arising under federal law, the court could not affirm the

decision by reference to Bacon alone. The Petitioners fur-

ther restated their arguments that the court’s Bacon deci-

sion was incorrect as a matter of West Virginia law and

* Simultaneously with the filing of this Petition, the Bishop

has petitioned this Court for a writ of certiorari reviewing the

decision of the Supreme Court of Appeals in the context of the

Cabell County Action.

3 Although City of Clarksburg v. Grandeotto, Inc. also involved

challenges under state law and the Equal Protection Clause to a

“municipal service fee” purportedly enacted pursuant to W. Va.

Code § 8-13-13, all of the landowners in that case were either

for-profit corporations or natural persons.

that Wheeling’s practice, even if nominally authorized by

state law, violated the Equal Protection Clause.

The Petitioners participated in oral argument before

the Supreme Court of Appeals on November 10, 1998. At

that argument, counsel for the Petitioners argued each of

the issues raised in the petitions for appeal. Counsel for

the City responded only that, although the City already

taxed all non-exempt property within its limits at the

maximum rate permitted under the West Virginia Consti-

tution, the Fire Charge and the Service Fee were some-

how “necessary” for the City to continue to provide fire

services.

3. The Decision of the Supreme Court of Appeals

On December 14, 1998, the Supreme Court of

Appeals issued a per curiam decision in affirming the

decisions below. See City of Clarksburg v. Grandeotto, Inc.,

_ W. Va. _, —. S.E.2d __, 1998 WL 874967 (1998).

Appendix at 1-15. The per curiam opinion ignored the

Petitioners’ arguments and looked no further than the

syllabus points of the court’s state-law-based decision in

Bacon. The opinion noted that Bacon had distinguished

United States v. City of Huntington, in which the Fourth

Circuit had held that Huntington could not collect the

Service Fee on property owned by the federal govern-

ment, 999 F.2d at 73, from the facts before it on the basis

that “a federal right is not involved.” Appendix at 13-14

(citing Bacon, 473 S.E.2d at 750-51). It added, “The Fourth

Circuit’s holding did not apply to the Bacons or to the

Board of Education. The same is true for the appellants in

the case sub judice.” Appendix at 14. The court then

restated its Syllabus Points 6 and 8 from Bacon — the latter

of which dealt with a board of education’s statutory

authority to pay a municipal service fee, a matter not

raised by the Board — and offered no new reasoning in

support of its decision. Appendix at 14-15.

Two justices on the five-member court dissented.

They stated that they would find that the City’s practices

violated the Equal Protection Clause:

[I]f the federal government is immune from pay-

ing a “fee,” the other entities listed in W. Va.

Code § 11-3-9 are also. To say otherwise is a

clear denial of equal protection to the churches

and schools. Sadly, their recourse must now be

to the federal courts to set things right. Accord-

ingly, | would find that W. Va. Code § 11-3-9

exempts the Diocese and the schools from pay-

ing the “fees” at issue. . . . By holding to the

contrary, the majority opinion opens the door to

additional taxes and an increasing burden on

those institutions that are, under our Constitu-

tion and by law, exempt from such taxation.

Appendix at 19 (Maynard, J., dissenting).

4. Motion for Reconsideration

The Petitioners filed a Petition for Rehearing with the

Supreme Court of Appeals on January 13, 1999.4 The

Petitioners submitted that the Supreme Court of Appeals

had erred in overlooking and not resolving their assign-

ments of error arising under the U.S. Constitution. They

expressly pointed to parallels between this decision and

the posture in which this Court reversed the decision of

the Supreme Court of Appeals in Allegheny Pittsburgh Coal

Co., Inc. v. County Commissioners of Webster County, West

Virginia, 488 U.S. 336 (1989). They further submitted that

the court had erred in not concluding that the City’s

* The Bishop also joined in the Petition for Rehearing with

regard to the Supreme Court of Appeal’s affirmance of the

decision of the Circuit Court for Cabell County and petitioned

the Supreme Court of Appeals for rehearing on January 13,

1999.

scheme of taxing them while treating the federal govern-

ment as exempt from the Fire Charge violated their right

to equal protection.

The Supreme Court of Appeals denied the petition

for rehearing on January 28, 1999. See Appendix at 29-30.

Although one of the justices who dissented from the

Supreme Court of Appeal’s initial decision had left the

court in the interim, the court denied the petition for

rehearing by a similar three-to-two vote. Appendix at 30.

REASONS FOR GRANTING THE WRIT

The circumstances under which this Court will grant

a petition for writ of certiorari are set out in Rule 11 of

this Court’s Rules:

Review on a writ of certiorari is not a matter

of right, but of judicial discretion. A petition for

a writ of certiorari will be granted only for

compelling reasons. The following, although

neither controlling nor fully measuring the

Court's discretion, indicate the character of the

reasons the Court considers:

“aeane

(b) a state court of last resort has decided

an important federal question in a way that

conflicts with the decision of another state

court of last resort or of a United States

court of appeals;

appeals has decided an important question

of federal law that has not been, but should

be, settled by this Court, or has decided an

important federal question in a way that

conflicts with relevant decisions of this

Court.

*aeaa4

In arriving at its decision in this matter, the Supreme

Court of Appeals erred in respects that would support

review under both of these criteria. The court ignored the

command of this Court in decisions such as Howlett v.

Rose, 496 U.S. 356, 369 (1990) and Felder v. Casey, 487 U.S.

131 (1988) that a state court of competent jurisdiction

must hear and consider issues presented to it that arise

under federal law. To the extent, if any, that the court

silently addressed the Petitioners’ federal-law claims and

defenses, it decided that, contrary to the holdings of the

U.S. Court of Appeals for the Fourth Circuit in Folio v.

City of Clarksburg, 134 F.3d 1211 (4th Cir. 1998) and United

States v. City of Huntington, 999 F.2d at 73, a “municipal

services fee” imposed on all owners of real property

without regard to the value of that property was a tax,

rather than a service fee, for purposes of federal law. In

the same manner, the Supreme Court of Appeals ignored

the holding of this Court in Allegheny Pittsburgh Coal Co.

that, where a state’s law directs that all taxes upon prop-

erty are to be assessed on the basis of assessed value, the

taxation of property on some other basis that results in

long-term and significant disparities in the amount paid

violates the Equal Protection Clause of the Fourteenth

Amendment to the U.S. Constitution. For these reasons,

this Court should grant this petition and, on full review,

reverse the decision of the Supreme Court of Appeals.

A. In Not Addressing and Resolving the Petitioners’

Assignments of Error Arising Under the U.S. Con-

stitution, the Supreme Court of Appeals Over-

looked the Clear Teachings of this Court.

Just as federal courts must often apply rules of deci-

sion provided by state law, see Erie Railroad Co. v.

Tompkins, 304 U.S. 64 (1938), the Supremacy Clause of the

U.S. Constitution requires state courts to apply federal

law wherever appropriate:

This Constitution, and the Laws of the United

States which shall be made in Pursuance

thereof; and all Treaties made, or which shall be

made, under the Authority of the United States,

shall be the supreme Law of the Land; and the

Judges in every State shall be bound thereby,

any Thing in the Constitution or Laws of any

State to the Contrary notwithstanding.

U.S. Const. Art VI; see also Public Service Comm'n of Utah v.

Wycoff Co., Inc., 344 U.S. 237, 247-48 (1952) (“State courts

are bound equally with the federal courts by the Federal

Constitution and laws.”).°

This Court and the court below therefore have “a

constitutional duty ‘to proceed in such manner that all

the substantial rights of the parties under controlling

federal law [are] protected.’ ” Felder, 487 U.S. at 151 (quo-

ting Garrett v. Moore-McCormack, Co., 317 U.S. 239, 245

(1942)). In the absence of a “valid excuse,” a state court of

competent jurisdiction must consider the federal claims

put before it. Howlett, 496 U.S. at 369-70.

The Supreme Court of Appeals erred in its failure to

consider the Petitioners’ federal constitutional claims,

and the Circuit Court erred in its conclusion that it could

not consider those claims. The State of West Virginia has

clearly vested the circuit courts with jurisdiction to con-

sider challenges to the validity, both facially and as

applied, of municipal taxes and user fees. See W. Va.

Const. art. VIIL § 6 (empowering circuit courts to exercise

“original and general jurisdiction of all civil cases at law

where the value or amount in controversy . . . exceeds

one hundred dollars” and of all civil cases in equity); W.

Va. Code § 51-2-2 (same, but increasing required amount

5 The Supreme Court of Appeals has itself previously

recognized the supremacy of federal law and its obligation to

adhere to that law. See, e.g., Arbogast v. Arbogast, 174 W. Va. 498,

327 S.E.2d 675, 679 (1984) (recognizing that the federal Parental

Kidnapping Prevention Act “establishes a policy of federal

preemption in enforcement of out-of-state custody disputes

which, under the Supremacy Clause, takes precedence over

state law and must be consulted first in determining whether

the Kansas decree is entitled to enforcement here.” (footnote

omitted)).

in controversy to $300.00). Moreover, the circuit courts

have frequently considered challenges to the validity of

both municipal taxes and municipal user fees. See, ¢.¢.,

Bacon, 473 S.E.2d at 748-49 (considering both circuit

court's grant of summary judgment and question certi-

fied by circuit court on validity of charge denominated as

“municipal service fee”); Central Realty Co. v. Martin, 126

W. Va. 915, 30 S.E.2d 720, 722 (1944) (reviewing circuit

court’s determination under W. Va. Code § 11-3-9 that

property held in trust for benevolent association was

exempt from property taxes).

The competence of the Supreme Court of Appeals to

consider these issues is clear not only from its review of

those circuit-court decisions but also from the constitu-

tional and statutory provisions under which it was cre-

ated. See W. Va. Const. art. VIII, § 3 (setting forth that

Supreme Court of Appeals “shall have appellate jurisdic-

tion in civil cases at law where the matter in controversy,

exclusive of interest and costs, is of greater value or

amount than three hundred dollars”); W. Va. Code

§ 51-1-3 (authorizing Supreme Court of Appeals to exer-

cise appellate jurisdiction over civil cases in which, inter

alia, amount in controversy is greater than or equal to one

hundred dollars, a party challenges the right of a county

to levy a toll or tax or a party challenges the constitu-

tionality of a law). Consistent with this jurisdiction, the

Supreme Court of Appeals and the circuit courts have

previously heard and determined federal-law challenges

to taxes imposed under the state’s authority. See, e.g.,

Capitol Cablevision Corp. v. Hardesty, 168 W. Va. 631, 285

S.E.2d 412 (1981) (considering challenges to business and

occupation tax under Commerce and Equal Protection

Clauses of U.S. Constitution). Therefore, both courts

below were required to consider those claims and to

apply federal law to them.¢

federal constitutional issues is particularly strong here, as the

Although this Court acknowledged in Howlett, 496

U.S. at 369, that a state court might have a “valid excuse”

not to consider a federal claim, no such excuse can be

found here. To date, the only excuses that this Court has

considered and deemed to be valid have involved “neu-

tral rule[s] of judicial administration.” Id. at 374.7 Neither

of the courts below offered such an excuse. The Supreme

Court of Appeals never explained its failure to consider

the federal issues. The Circuit Court stated only that it

was bound by the reasoning of Bacon. The Supreme Court

of Appeals did not decide the state-law claims presented

to it in Bacon on the basis of any question of judicial

administration, or even of procedure. Instead, it resolved

that appeal by exercising jurisdiction over the parties

before it and determining as a matter of the substantive law

of West Virginia that the City of Huntington’s municipal

service fee was a user fee and not a tax. See generally 473

S.E.2d at 751-54. The Petitioners are not aware of any

“rule of judicial administration” that might properly have

precluded consideration by the court below of their fed-

eral-law challenge to the Fire Charge.

[he facts on which this Court reversed the state

court’s judgment in Howlett are in many respects analo-

gous to the facts here. There, the plaintiff brought an

action in Florida state court against, inter alia, the school

district in which he had attended high school. He alleged

that the defendants, including several individual school

federal courts have construed the Tax Injunction Act, 28 U.S.C.

§ 1341, to require these claims to be presented in the first

instance to state — rather than federal — courts. See, e.g., Folio, 134

F.3d at 1214.

7 Moreover, none of the three cases in which the Howlett

Court acknowledged that neutral rules of judicial

administration had precluded consideration of federal claims

were decided on the basis of whether the plaintiffs’ claims were

federal in nature. Rather, the “neutral rule” in each case looked

to either the residency of the parties or the locus of the events

giving rise to the cause of action. See 496 U.S. at 374-75.

i |

officials, had violated his rights under the Fourth and

Fourteenth Amendments by searching his automobile on

school property while he attended high school. He sought

to recover damages under 42 U.S.C. § 1983. 496 U.S. at

359. The trial court dismissed his claim against the school

district, and the intermediate appellate court affirmed.

The appellate court reasoned that, because Florida had

not expressly waived the statutory immunity of entities

such as school boards to actions under § 1983, the peti-

tioner’s claim could not be maintained in a Florida state

court. It further held that, regardless of the source of law

that provided a claim against the state or its subdivision,

the question of the immunity of the state and its entities

to suit in its own courts was to be resolved by reference

to its own law. Id. at 359-60. The Florida Supreme Court

denied the plaintiff's petition for discretionary appeal,

but this Court granted certiorari. Id. at 360.

On review, this Court reversed and held that, regard-

less of the forum, the issue of whether the school district

was immune to the § 1983 claims was to be determined

solely by reference to federal law. It first noted that,

because of the Supremacy Clause, federal law was part of

the law to be enforced in the courts of each of the states:

Federal law is enforceable in state courts

not because Congress has determined that fed-

eral courts would otherwise be burdened or that

state courts might provide a more convenient

forum — although both might well be true — but

because the Constitution and laws passed pur-

suant to it are as much law in the States as laws

passed by the state legislature. The Supremacy

Clause makes those laws “the supreme Law of

the Land,” and charges state courts with a coor-

dinate responsibility to enforce that law accord-

ing to their regular modes of procedure. “The

laws of the United States are laws in the several

states, and just as much binding on the citizens

and courts thereof as the State laws are. .. . The

two together form one system of jurisprudence,

which constitutes the law of the land for the

State; and the courts of the two jurisdictions are

not foreign to each other, nor to be treated by

each other as such, but as courts of the same

country, having jurisdiction partly different and

partly concurrent.”

Id. at 367 (quoting Clafin v. Houseman, 93 U.S. 130, 136-37

(1876)) (alteration in original). Therefore, the Court rea-

soned, state courts could not decline to enforce a federal

right in the absence of a “valid excuse.” Id. at 370. To be

“valid,” this Court added, an excuse could not be “incon-

sistent with or violate[ |] federal law,” i.e., it could not be

based upon either a disagreement with the policy

expressed in federal law or in a refusal to recognize the

supremacy of that law. Id. at 371.

This Court then concluded that the courts below had

erred in finding the school board to be immune. It consid-

ered two possible interpretations of the appellate court's

decision and found the decision to be infirm under either

interpretation. First, this Court rejected the suggestion

that the defendants might be entitled to state-created

immunities over and above the immunities from § 1983

actions provided under federal law. This Court noted,

“The elements of, and the defenses to, a federal cause of

action are defined by federal law.” It held that Florida

lacked the power to overcome a settled line of federal

case law under which all of the defendants were subject

to suit under § 1983. Id. at 375-76. This Court then

rejected the suggestion that Florida’s sovereign immunity

statute placed the plaintiff’s claims outside the scope of

the claims that the trial court had jurisdiction to hear. It

noted that the trial court that had declined to hear the

plaintiff’s claim was established as a court of general

jurisdiction. It added that the trial court regularly heard

state-law tort claims brought by individuals against enti-

ties of the state and regularly awarded real damages. It

concluded that Florida could not refuse to provide this

forum to the plaintiff solely because the right he asserted

was federally created. Id. at 378-79.

That holding cannot be reconciled with the conduct

of the courts here. Like the state trial court in Howlett, the

Circuit Court was established as a court of general juris-

diction. Because the City’s claims against each of the

Petitioners vastly exceeded the $100.00 and $300.00 juris-

dictional requirements, the Petitioners’ constitutional

claims and defenses were properly before the Circuit

Court. There was no excuse for the Circuit Court's failure

to consider those claims and defenses. Therefore, under

this Court’s precedents, the Circuit Court erred in balking

at these claims.

The duty of the Supreme Court of Appeals to con-

sider and rule upon these claims and defenses was even

more clear. Not only did the amount in controversy

exceed that court's jurisdictional minimum, the West Vir-

ginia legislature also expressly authorized that court to

hear appeals to the validity of taxes and appeals of con-

stitutional issues. Again, the court offered no excuse or

explanation for its failure to consider the federal-law

issues. It, too, erred in restricting its inquiry to issues of

state law.

By failing to address the Petitioners’ constitutional

challenge to the Fire Charge, the Supreme Court of

Appeals has left this case in the same procedural posture

in which this Court intervened in Allegheny Pittsburgh

Coal. The taxpayers in that case, recent purchasers of land

in Webster County, West Virginia, challenged the county’s

system of determining property assessments by almost-

exclusive reference to the most recent purchase price.

They contended that this practice led to long-term dis-

parities in taxation that violated both the West Virginia

Constitution and the Fourteenth Amendment's Equal

Protection Clause. 488 U.S. at 339-40. In reviewing the

circuit court’s decision in favor of the taxpayers, the

Supreme Court of Appeals acknowledged that the tax-

payers’ claims arose from both constitutions. In re 1975

Tax Assessment Against Oneida Coal, 178 W. Va. 485, 360

S.E.2d 560, 562 (1987), rev'd sub nom. Allegheny Pittsburgh

Coal v. County Commissioners of Webster County, West Vir-

ginia, 488 U.S. 336 (1989). However, its substantive anal-

ysis focused exclusively on the state constitutional issues.

The court never addressed the federal claims, federal law

or federal precedent. See generally id. at 562-65. Holding

only that the county’s assessment system comported with

the West Virginia Constitution, the court reversed the

circuit court below. Id. at 565.

This Court granted certiorari to consider the over-

looked federal issue. Allegheny Pittsburgh Coal, 488 U.S. at

342 (“We granted certiorari to decide whether these

Webster County tax assessments denied petitioners the

equal protection of the law and, if so, whether petitioners

could constitutionally be limited to the remedy of seeking

to raise the assessments of others.”). In addressing this

claim, this Court looked to the Equal Protection Clause of

the Fourteenth Amendment and to case law construing

that provision in the context of state taxation. See id. at

345-46. This Court held that the county’s purchase-value

assessment system, which had no basis in state law,

resulted in exactly the sort of “systematic” disparity in

assessments and taxation that violated the Equal Protec-

tion Clause. It therefore reversed the Supreme Court of

Appeals and struck down the Webster County system as

a matter of federal law. Id. at 346.

As in Howlett, Felder and Allegheny Pittsburgh Coal,

the Supreme Court of Appeals has overlooked the pres-

ence of a federal-law issue here. The Petitioners therefore

respectfully request that this Court accept review of the

decision below.

B. To the Extent, if Any, that the Supreme Court of

Appeals Addressed the Constitutional Issues

Raised by the Petitioners, It Created a Conflict with

the Decisions of the U.S. Court of Appeals for the

Fourth Circuit by Deciding that the Fire Charge is a

User Fee, Rather than a Tax, for Purposes of Federal

Law.

The Petitioners do not believe that the decision of the

Supreme Court of Appeals addressed the federal-law

aspects of their challenge to the Fire Charge. Even if this

Court were to conclude to the contrary, however, this

Court should still grant this Petition. If the Supreme

Court of Appeals did address the federal-law issues

raised by the Petitioners, then it could have affirmed the

decision of the Circuit Court only by coming to legal

conclusions on those issues that were directly contrary to

the holdings of the U.S. Court of Appeals for the Fourth

Circuit in two decisions handed down within the last six

years. The reasoning of the Supreme Court of Appeals, if

correct, would call into question the analysis employed

by numerous federal courts, including the First and

Fourth Circuits, in determining whether a particular gov-

ernmental levy is a user fee or a tax.

1. Under the Supremacy Clause, the Question of

Whether the Fire Charge is a “Tax” for Purposes

of the Equal Protection Clause is to be Deter-

mined by Reference to Federal Law

The Petitioners have alleged throughout this action -

before the Circuit Court, the Supreme Court of Appeals -

that the City’s efforts to collect the Fire Charge from them

violate their rights under the Equal Protection Clause of

the Fourteenth Amendment to the U.S. Constitution. For

purposes of federal constitutional, statutory and common

law, the question of whether a particular charge is a “tax”

is determined by reference to federal-law rules of deci-

sion. In Carpenter v. Shaw, 280 U.S. 363, 367-68 (1930), this

Court looked to federal law to determine whether a state-

imposed tax on oil and gas royalties was invalid as

applied to the petitioner because it was inconsistent with

a tax exemption granted in an Indian treaty, an area

within exclusive federal purview:

Where a federal right is concerned, we are not

bound by the characterization given to a state

tax by state courts or Legislatures, or relieved

by it from the duty of considering the real

nature of the tax and its effect upon the federal

right asserted.

Twice within the last six years, the Fourth Circuit has

followed this rule and applied principles of federal law in

determining whether “municipal service fees” assessed

by West Virginia municipalities are actually user fees or

are instead taxes. In United States v. City of Huntington,

999 F.2d at 74, the court looked to federal law in conclud-

ing that the defendant city’s “municipal services fee” was

a tax that, under the Supremacy Clause, could not be

levied on federally owned property. In Folio, the same

court made clear that this analytical model - and the

result it produced - was not limited to questions of

constitutional immunities but was instead applicable to

all questions arising under federal law. 134 F.3d at 1217.

The court again relied on a federal-law definition of “tax”

in deciding that the Tax Injunction Act, 28 U.S.C. § 1341,8

precluded the federal courts from considering at all

whether Clarksburg’s collection of its fire protection fee

violated the Fourteenth Amendment's Equal Protection

and Due Process Clauses. Id. at 1219.

The application of these principles here is obvious.

The Equal Protection Clause establishes a federal guaran-

tee. Therefore, the question of whether a particular

assessment levied by any state or any subdivision thereof

5 That statute states, “The district courts shall not enjoin,

suspend or restrain the assessment, levy or collection of any tax

under State law where a plain, speedy and efficient remedy may

be had in the courts of such State.” 28 U.S.C. § 1341.

is a “tax” that violates the Equal Protection Clause is

properly approached as a question of federal law.

2. The U.S. Court of Appeals for the Fourth Circuit

Has Held that a “Municipal Service Fee” Levied

Against All Owners of Real Property is a Tax

and not a “User Fee” for Purposes of Federal

Law

The Fourth Circuit has left little doubt that municipal

services fees similar to the Fire Charge are to be consid-

ered taxes for purposes of federal law. In United States v.

City of Huntington, the Fourth Circuit concluded that the

fee assessed by the City of Huntington pursuant to W. Va.

Code § 8-13-13 to defray the cost of fire services and flood

protection was in actuality a tax that, under the Suprem-

acy Clause, could not be levied against property in that

city owned by the federal government. 999 F.2d at 74. In

reaching this conclusion, the court considered “all the

facts and circumstances . . . and assess[ed] them on the

basis of economic realities.” Id. at 73 (citing United States

v. City of Columbia, Missouri, 914 F.2d 151, 154 (8th Cir.

1990)).

In its 1998 decision in Folio, the Fourth Circuit came

to the same conclusion under the Tax Injunction Act in

testing a similar fee enacted by the City of Clarksburg.

The court explained its analysis:

A tax is generally a revenue-raising measure,

imposed by a legislative body, that allocates rev-

enue “to a general fund, and [is] spent for the

benefit of the entire community.” [Collins Hold-

ing Corp. v. Jasper County, South Carolina, 123

F.3d 797, 800 (4th Cir. 1997)] (quoting San Juan

Cellular Tel. Co. v. Public Serv. Comm'n, 967 F.2d

683, 685 (1st Cir. 1992)). A user fee, by contrast,

is a “payment[] given in return for a govern-

ment provided benefit” and is tied in some fash-

ion to the payor’s use of the service. United

States v. City of Huntington, 999 F.2d 71, 74 (4th

Cir. 1993). Generally speaking, a special assess-

ment imposed by a municipality qualifies as a

tax within the meaning of the Tax Injunction

Act. See, e.g., Burris [v. City of Little Rock], 941

F.2d [717,] 720 [(8th Cir. 1991)]; Indiana Waste

Sys., Inc. v. County of Porter, 787 F. Supp. 859, 865

(N.D. Ind. 1992) (collecting cases).

134 F.3d at 1217. The court added that it found the City of

Clarksburg’s levy to be indistinguishable from the one

that it had found to be a tax in United States v. City of

Huntington. Id. On the basis of that conclusion, the court

affirmed the district court’s determination that it had

lacked jurisdiction to hear the Folios’ challenge to the

Clarksburg fee. Id. at 1211.

Therefore, to the extent that the Supreme Court of

Appeals concluded that the Fire Charge was not a tax, its

holding created a conflict with the Fourth Circuit. This

Court should resolve this conflict and enunciate stan-

dards that would prevent this problem from arising again

in the future.

C. The Supreme Court of Appeals Acted Contrary to

the Teachings of this Court when it Failed to Hold

that the City’s Application of the Charge to Real

Property Owned by the Petitioners Violated the

Petitioners’ Rights Under the Equal Protection

Clause of the U.S. Constitution.

Although the states have broad power under the U.S.

Constitution to levy taxes, that power is not unfettered.

See, e.g., Kentucky Union Co. v. Kentucky, 219 U.S. 140, 151

(1911). The Equal Protection Clause, under which each

state must guarantee “to any person within its jurisdic-

tion the equal protection of the laws,” is among the most

important of these restrictions. That clause protects pri-

vate parties against the imposition of taxes that, although

facially neutral, are enforced in a discriminatory manner.

See, e.g., Allegheny Pittsburgh Coal Co., 488 U.S. at 345-46

(invalidating county property tax assessment system that

“selected recent transferees of real property] out for

discriminatory treatment by subjecting [them] to taxes

not imposed on other members of the same class”) (quot-

ing Hillsborough v. Cromwell, 326 U.S. 620, 623 (1946)).9

Here, the City’s effort to collect the Fire Charge from

the Petitioners fails to afford them the equal protection of

West Virginia’s laws. In contravention of explicit State

statutory language that places each of the Petitioners and

the federal government in a single class, the City has

persisted in assessing the Fire Charge against the Private

Plaintiffs and the Board but not against the federal gov-

ernment. Moreover, because the City seeks to collect the

Fire Charge from the Petitioners on the basis of the

square footage of the buildings on their property, it

would violate the guarantee of Article X, Section 1 of the

West Virginia Constitution that property will be taxed

only in proportion to its assessed value.

Here again, the decision below is in tension with this

Court’s decision in Allegheny Pittsburgh Coal. In that case,

Webster County followed a practice of fixing the assessed

value of all property at fifty percent of the price for which

it had last sold. Although occasional adjustments were

made to the assessments of property that had not recently

changed hands, these adjustments were infrequent and

minimal. 488 U.S. at 338-39. As a result, the petitioners’

property was assessed at from eight to thirty-five times

the value of comparable adjoining lots, and the county’s

adjustment policy would have required over 500 years to

correct the imbalance. Id. at 341-42. The circuit court

found that this system of assessment discriminated

against the petitioners in violation of both the Equal

Protection Clause and the guarantees of the West Virginia

Constitution. Id. at 339-40. As noted above, the Supreme

9 The protection of the Equal Protection Clause extends

beyond natural persons to include private entities. See

Metropolitan Life Insurance Co. v. Ward, 470 U.S. 869, 881 n.9

(1985) (holding that corporations are “persons” for purposes of

Equal Protection Clause).

Court of Appeals reversed that decision, and this Court

granted certiorari. Id. at 342.

rhis Court reversed the decision below and held that,

given the structure of West Virginia’s system of taxation,

the county’s assessments violated the Equal Protection

Clause. This Court was careful to point out that the Equal

Protection Clause could tolerate short delays in equaliza-

tion of tax rates, id. at 343, and that the states were

generally free to create reasonable classes of taxpayers

and assign differing tax burdens to each of those classes,

id. at 344. However, the Court pointed out, West Virginia

law contained nothing that would have suggested that

recent purchasers of property could be taxed any differ-

ently than persons who had owned their property for

some period of time or suggested that the State’s counties

had the power to create such classes. Id. at 345. The

County’s assessment system, therefore, could not stand.!°

1. The Law of West Virginia Does Not Distinguish

Between the Property Owned by the Petitioners

and Property Owned by Entities of the Federal

Government in Any Manner That Would Allow

the City to Assess the Fire Charge Against One

But Not the Other.

The City’s scheme for assessment of the Fire Charge

suffers from the same basic flaw found to be fatal in

Allegheny Pittsburgh Coal. West Virginia has created a

single class that is entirely exempt from property taxes. See

W. Va. Code § 11-3-9. Throughout the course of this

action, the Petitioners and the City have agreed that the

10 The validity of Allegheny Pittsburgh Coal is in no way

affected by this Court’s decision in Nordlinger v. Hahn, 505 U.S. 1

(1992). In Nordlinger, this Court upheld Proposition 13,

California’s statutory acquisition-value property assessment

system, as an explicit classification scheme by which the

sovereign had rationally created classes of property and treated

those classes differently for purposes of taxation. Id. at 15-16.

property on which the City is attempting to impose the

Fire Charge and the Service Fee is within this single,

exempt class of property. They have also agreed that real

property owned by the federal government and its instru-

mentalities (principally the GSA) is within this class, as

well.

The City does not treat the Petitioners’ property and

federally-owned property in the similar manner required

by the Equal Protection Clause. The City admits that it

does not collect the Fire Charge from instrumentalities of

the federal government. The reason is because the federal

courts have recognized that the so-called user fee is noth-

ing more than a disguised property tax. The effect of this

determination is that similarly classified entities are

treated in a dramatically opposite manner. In Allegheny

Pittsburgh Coal, this Court rejected a tax scheme that

resulted in similarly classified taxpayers paying greatly

disproportionate taxes as a result of the assessment meth-

odology. It was not enough, this Court held, for the

taxing body to shrug its shoulders and stick with a

flawed system. Similarly, the City cannot maintain a

property tax under the guise of a service fee where the

effect is to cause not just a gross, but an absolute, dis-

parity in how similarly classified entities are treated. The

City’s actual practice therefore, results in precisely the

same type of discrimination identified in Allegheny Pitts-

burgh Coal and is similarly invalid under the Equal Pro-

tection Clause.!!

11 Even if federal law were to lead to the conclusion that the

Fire Charge is a “user fee” in this context, the City’s practice still

could not withstand scrutiny. The Allegheny Pittsburgh Coal

Court suggested that local governments cannot create

classifications unless authorized to do so by state law. See 488

U.S. at 345. Section 8-13-13 of the West Virginia Code, the

statutory provision that authorizes municipalities to assess user

fees recognizes no classes and contains no suggestion that

federal property should be exempt from those fees. Similarly,

the City has made absolutely no effort to classify federally

Until the City creates a true service fee that meets the

reasonable parameters set by the federal courts, or until

the West Virginia Legislature reexamines the tax-exempt

classifications that have been maintained since this state

was created, the equal protection rights of the Appellants

will continue to be violated.

Despite the lack of any support in a legislative sys-

tem of classification, the Fire Charge is assessed against

some ostensibly exempted property owners but not

against others. As applied to the Petitioners, this system

violates the Equal Protection Clause and must be struck

down.

2. The City’s Levying of the Fire Charge on a Basis

Other than Assessed Value Violates the Equal

Protection Clause in the Same Manner as the

Purchase Value System Challenged in Allegheny

Pittsburgh Coal.

The City’s method of assessing the Fire Charge also

suffers from precisely the same flaw that this Court found

to be fatal to Webster County’s assessment system in

Allegheny Pittsburgh Coal. In order to avoid the clear hold-

ings of the Supreme Court of Appeals in cases such as

City of Fairmont v. Pitrolo Pontiac-Cadillac Co., 172 W. Va.

505, 308 S.E.2d 527, 529 (1983), cert. denied, 466 U.S. 958

(1984) and Hare v. City of Wheeling, 171 W. Va. 284, 298

S.E.2d 820, 826 (1982), the City has chosen to impose the

Fire Charge on the basis of square footage, rather than

valuation. However, Article X, Section 1 of the West Vir-

ginia Constitution guarantees that property in West Vir-

ginia will be taxed only on the basis of its assessed value.

Moreover, as discussed above, the Fire Charge must be

owned property differently from property owned by any other

person or entity.

considered a tax in evaluating whether it violates the

Equal Protection Clause.

The Fire Charge is therefore indistinguishable from

the system of taxation that this Court invalidated in Alle-

gheny Pittsburgh Coal. It taxes property, but in a manner

that ignores that property’s value. Property burdened

with large structures that have little value and little

potential to generate revenue will be taxed at a higher

rate than more valuable property with smaller buildings.

Moreover, so long as those structures remain on a prop-

erty, the disparity between the Fire Charge and the prop-

erty’s value will continue. The City’s ordinance contains

no provision for equalization over time — not even over

the five hundred years that this Court held to be plainly

inadequate in Allegheny Pittsburgh Coal. 488 U.S. at 341-42.

The implications of such a system for religious and

educational entities are enormous. A tax based on square

footage rather than value will burden the Petitioners with

huge debts arising from classroom and sanctuary space

from which they cannot legally or practically produce a

profit. Regardless of the City’s need for revenue, the City

cannot be permitted to circumvent and flout the State of

West Virginia’s constitutional and statutory commands in

order to raise those funds.

Under this Court’s decisions interpreting the Equal

Protection Clause, the Fire Charge cannot be permitted to

stand. Therefore, if this Court determines that the deci-

sion of the Supreme Court of Appeals actually reached

this issue, this Court should grant this Petition and affirm

the correctness of its previous decisions.

CONCLUSION

For the reasons stated above, the Petitioners respect-

fully request that this Court grant this petition, issue a

30)

, | aeal .

Verse the de 1isi0n below

Respet tfully submitted,

THorp, REED & ARM

One Riverfront Center

Pittsburgh, PA 15222

(412) 394-7711

Janey Ricey & HARMAN,

Riley Building, ourte 90

P.O. Box 631

Nheeling, WV 26003

f 304) 932-66. ~—

Tames C. GARDII

& ALTMEYER

61 Fourteenth Street

Wheeling, WV 26003

(304) 232-6810

Tames F. COMPANION

fhe Maxwell Centre

32-20th Street, Suite 500

P.O. Box 6336

Wheeling, WV 26003

, } \ oe i oh.

(304) 53-3390

the Supreme ‘ ourt of Appe

SCHRADER, BYR! & COMPANI

ee —S”S—“‘“‘i™iCCC;C;~™

App. l

IN THE Sl PREME COURT OF APPEALS

OF WES! VIRGINIA

September 1998 lerm

No. 25143

CITY OF Cl ARKSBURG,

A MUNIC [PAL CORPORATION,

Appellee

NA CORPORATION

. FOLIO; MID-CITY LAND

A HIGHRISE

JOSEPH FOLIO,

GRANDEOTTO, INC.,

BERNARD J AND KATHY A

CO.; BERNARD 1 FOLIO D B

ASSOCIATES KATHRYN FOLIO;

Appellants

ourt of Harrison County

Bedell, Judge

3.C-706-2,

Appeal from the Circuit C

Honorable Thomas A

93-C -609-2, 93-C-648-2, 9

Civil Action Nos

93-C-707-2, 94-4 -184-1 & 94-4 -196

(Filed De« 15, 1998)

AFFIRMED

AND

THE CITY OF HUNTINGTON,

A WEST VIRGINIA CORPORATION,

Appellee

MOST REVEREND BERNARD W. SCHMITT, BISHOP

OF THE ROMAN CATHOLIC DIOCESE OF

WHEELING-CHARLESTON,

Appellant

Appeal from the Circuit Court of Cabell County

Honorable David M. Pancake, Judge

Civil Action No. 97-C-320

AFFIRMED

AND

A pp 3

No. 25402

WHEELING COLLEGE, INC., A WEST VIRGINIA

CORPORATION, AND THE MOST REVEREND

BERNARD W. SCHMITT, BISHOP OF THE DIOCESE

OF WHEELING-CHARLESTON,

Appellants

THE CITY OF WHEELING,

A MUNICIPAL CORPORATION,

Appellee

AND

THE CITY OF WHEELING,

A MUNICIPAL CORPORATION,

Appellee

THE OHIO COUNTY BOARD OF EDUCATION,

Appellant

Appeal from the Circuit Court of Ohio County

Honorable Ronald E. Wilson, Judge

Civil Action Nos. 95-C-72W & 96-C-1]1

AFFIRMED

Submitted: November 10, 1998

Filed: December 15, 1998

App. 4

Gregory A. Morgan, Esq.

Young, Morgan & Cann

Clarksburg, West Virginia

Attorney for City of Clarksburg

J. Cecil Jarvis, Esq.

McNeer, Highland, McMunn & Varner

Clarksburg, West Virginia

and

Thomas G. Eddy, Esq.

Eddy & Osterman

Pittsburgh, Pennsylvania

Attorneys for Grandeotto, Inc., et al.

Jendonnae L. Houdyschell, Esq.

City Attorney

Huntington, West Virginia

Attorney for The City of Huntington

G. Nicholas Casey, Jr., Esq.

Webster J. Arceneaux, III, Esq.

Sandra K. Henson, Esq.

Lewis, Friedberg, Glasser, Casey & Rollins

Charleston, West Virginia

and

Clifford B. Levine, Esq.

Peter K. Blume, Esq.

Stuart C. Gaul, Jr., Esq.

Cathy M. Armstrong, Esq.

Thorp, Reed & Armstrong

Pittsburgh, Pennsylvania

Attorneys for Bishop Schmitt

John Preston Bailey, Esq.

Harry L. Buch, Esq.

Bailey, Riley, Buch & Harman

Wheeling, West Virginia

and

App. 5

James C. Gardill, Esq.

Phillips, Gardill, Kaiser & Altmeyer

Wheeling, West Virginia

Attorneys for Wheeling College

Ronald M. Musser, Esq.

Rosemary J. Humway-Warmuth, Esq.

City of Wheeling Legal Department

Wheeling, West Virginia

Attorneys for The City of Wheeling

James F. Companion, Esq.

Schrader, Byrd & Companion

Wheeling, West Virginia

Attorney for the Ohio County Board of Education

Amici Brief

Ronald M. Musser, Esq

Rosemary J. Humway-Warmuth, Esq.

City of Wheeling

lendonnae Houdvschell Esq

City of Huntington

Steve Fanok, Esq

City of Morgantown

joe DiBartolomeo, Esq.

City of Weirton

Mark Matkovich, Esq

Citv of Beckley

jill Jerabeck, Esq.

City of Charleston

John Feuchtenberger, Esq.

City of Bluefield

Amy Haynie, Esq.

City of South Charleston

App. 6

Amicus Brief

James W. Withrow, Esq.

West Virginia Municipal League, Inc.

The Opinion of the Court was delivered PER CURIAM.

JUSTICE McCUSKEY dissents and reserves the right to

file a dissenting Opinion.

JUSTICE MAYNARD dissents and reserves the right to

file a dissenting Opinion.

JUSTICE McGRAW did not participate in the decision of

this case.

SYLLABUS BY THE COURT

1. “An ordinance which imposes a municipal ser-

vice fee pursuant to W.Va. Code, 8-13-13 [1971] upon the

owners of buildings at an annual rate plus a percentage

based upon the square footage of space contained in each

structure on the lot for the sole purpose of defraying the

cost of fire and flood protection services is a user fee

rather than a tax and therefore, is not in violation of the

Tax Limitation Amendment found in W.Va. Const. Art. X,

§ 1.” Syllabus Point 6, City of Huntington v. Bacon, 196

W.Va. 457, 473 S.E.2d 743 (1996).

2. “Pursuant to W.Va. Code, 18-5-9 [1933], a county

board of education is authorized to pay a municipal

service fee imposed by a municipality for fire and flood

protection services pursuant to W.Va. Code, 8-13-13 [1971]

in order to protect the health of its pupils and in order to

”

keep its school grounds and buildings in good order.

Syllabus Point 8, City of Huntington v. Bacon, 196 W.Va.

457, 473 S.E.2d 743 (1996).

Peg Rdbeet

App. 7

Per Curiam:

The three cases before us were consolidated for argu-

ment and opinion. In the first case, Grandeotto, Inc.,

Kathy A. Folio, Mid-City Land Co., Bernard J. Folio,

d/b/a Highrise Associates, Kathryn V. Folio, and Joseph

A. Folio (the Grandeottos) appeal the July 24, 1997 order

of the Circuit Court of Harrison County, West Virginia,

which granted summary judgment to the City of

Clarksburg and ordered the Grandeottos to pay the fire

service protection fee. In the second case, Bernard W.

Schmitt, Bishop of the Roman Catholic Diocese of Wheel-

ing-Charleston (the Bishop or Diocese), appeals the June

12, 1998 order of the Circuit Court of Cabell County, West

Virginia, which granted summary judgment to the City of

Huntington and ordered the Diocese to pay the municipal

service fee. In the third case, Wheeling College, Inc. (now

Wheeling Jesuit University) and Bishop Schmitt (the Uni-

versity and the Diocese) as well as the Ohio County

Board of Education (Board) appeal the August 19, 1998

order of the Circuit Court of Ohio County, West Virginia,

which granted partial summary judgment to the City of

Wheeling in that the court found the University, Diocese,

and Board must pay the fire service fee. Other issues

were reserved for further consideration.' That order was

! The court reserved three issues for further consideration

and action: the amounts owed by the University, the Diocese,

and the Board; whether a binding settlement existed between

the City, the University and Diocese; and whether delinquent

fire service fees were owed by the Board prior to this Court’s

decision in City of Huntington v. Bacon, 196 W.Va. 457, 473 S.E.2d

743 (1996).

App. 8

determined by the court to be a final, appealable order by

order entered August 28, 1998.

Che first case involves individual landowners who

own property within the City of Clarksburg. The City

enacted and amended ordinances imposing fire protec-

tion and waste collection service fees under the authority

of W.Va. Code § 8-13-13 (1971).? This Code section grants

local governments authority to enact ordinances for the

imposition of reasonable fees upon the users of municipal

services to defray certain municipal operating costs, in

this case, the costs of fire protection. Ordinance § 957.11

specifies that a flat fee is charged for fire protection

services to owners of residential property; owners of

W.Va. Code § 8-13-13 (1971) states in relevant part:

Notwithstanding any charter provisions to the contrary,

every municipality which furnishes any essential or special

municipal service, including, but not limited to, police and fire

protection, parking facilities on the streets or otherwise, parks

and recreational facilities, street cleaning, street lighting, street

maintenance and improvement, sewerage and sewage disposal,

and the collection and disposal of garbage, refuse, waste, ashes,

trash and any other similar matter, shall have plenary power

and authority to provide by ordinance for the installation,

continuance, maintenance or improvement of such service, to

make reasonable regulations with respect thereto, and to

impose by ordinance upon the users of such service reasonable

rates, fees and charges to be collected in the manner specified in

the ordinance: Provided, That any sewerage and sewage

disposal service and any service incident to the collection and

disposal of garbage, refuse, waste, ashes, trash and any other

similar matter shall be subject to the provisions of chapter

twenty-four [§ 24-1-1 et seq |, of this code

App. 9

nonresidential unit structures and multiple-family resi-

dential structures are assessed according to square foot-

age; nonresidential tenants must pay fifty percent of the

amount per square foot that nonresidential owners must

pay. The fee generates approximately $750,000 in revenue

per year, which is used to defray the costs of operating

the Clarksburg Fire Department. The fee comprises

approximately forty-two percent of the fire department's

budget of $1,809,000.

fhe individual landowners refused to pay the fire

protection fees assessed against their various properties.

rhe City of Clarksburg filed actions in circuit court in an

effort to collect the unpaid fire service fees. The actions

were consolidated by the court. After extensive discovery,

the parties made a series of dispositive motions, which

were converted by the court to Rule 56 motions for sum-

mary judgment. On July 24, 1997, the court granted the

Citv’s motion for summary judgment and denied the

landowners’ motion for summary judgment. The court

determined the amount owed by each landowner and

ordered that the fees be paid. It is from this order that the

landowners appeal

II.

In the second case, the City of Huntington brought

an action against the Diocese to collect unpaid municipal

service fees on two buildings located within the City. The

purpose of the fee is to defray the costs of providing fire

and flood protection. Pursuant to W.Va. Code § 8-13-13,

the City of Huntington enacted Ordinance § 773.03 and

began charging a municipal service fee in July 1990. The

App. 10

fee is assessed as a flat fee on each lot with an additional

amount assessed for each square foot of floor space in

each building erected on each lot. The fee generates

approximately $4,200,000 in revenue per year, while the

cost of providing fire and flood protection is approxi-

mately $6,900,000 per year. Therefore, the City must pay

an additional amount of approximately $2,700,000 annu-

ally to cover the cost of these services.

In conformity with the Fourth Circuit’s decision in

United States v. City of Huntington, W.Va., 999 F.2d 71 (4th

Cir. 1993), cert. denied, 510 U.S. 1109, 114 S.Ct 1048, 127

L.Ed.2d 371 (1994),* the City does not collect the service

fee from the federal government. Nor does the City bill

itself for the service fee.

The City attempted to collect unpaid fees from the

Bishop or Diocese for the two schools located in the City

by filing an action in circuit court in 1997. Both parties

moved for summary judgment. On July 21, 1997, the

court granted the Bishop partial summary judgment, stat-

ing that the April 1992 through June 1994 fee actually

constituted a tax which could not be levied against the

Bishop. The same order granted partial summary judg-

ment to the City, stating that “the municipal service fee

for the period of July 1, 1994 through April 24, 1997

constitutes a fee, not a tax, and can be levied against the

Defendant.” By order entered June 4, 1998, the court

3 United States v. City of Huntington, W.Va., 999 F.2d 71 {4th

Cir. 1993), cert. denied, 510 U.S. 1109, 114 S.Ct. 1048, 127 L.Ed.2d

371 (1994), holds that the City is barred by the Supremacy

Clause of the U.S. Constitution from collecting the service fee

from the federal government.

App. 11

found the Diocese was liable to the City for payment of

the service fee. The exact amount owed was determined

by order of court entered on June 12, 1998. It is from this

order the Diocese appeals.

Ill.

[he third appeal involves two cases which were con-

solidated by the circuit court. Pursuant to W.Va. Code

§ 8-13-13 (1971), the City of Wheeling enacted Ordinance

§ 793.03, the purpose of which is to defray the costs of

providing fire protection services to the City of Wheeling.

Owners of residential unit structures are assessed a flat

annual fee; owners of nonresidential unit structures are

assessed a rate based on the square footage of the build-

ing; tenants of nonresidential and residential unit struc-

tures are assessed a flat fee; owners or lessees of vehicles

are assessed a flat fee per vehicle. The ordinance exempts

no one from paying the fire service fee; however, the City

does not issue bills to itself for buildings and vehicles

titled in the name of the City.

The University and Diocese filed an action against

the City seeking a declaration that the fire service fee is

actually a tax from which they are exempt pursuant to

W.Va. Code § 11-3-9 (1998).4 The City instituted a

4 W.Va. Code § 11-3-9 (1998) states in pertinent part

(a) All property, real and personal, described in this

subsection, and to the extent herein limited, is exempt from

taxation:

(1) Property belonging to the United States, other than

property permitted by the United States to be taxed under state

law;

App. 12

collection action against the Board. The Board posited

essentially the same defenses to the fire service fee that

the University and Diocese raised in their action. The

court, therefore, consolidated the two actions. Following

discovery, the parties filed cross-motions for summary

judgment. The circuit court entered an order on August

19, 1998 finding that “the Defendants are authorized to

pay the fire service fee imposed by the City of Wheel-

ing|.]” Having reserved certain issues for later consider-

ation, the court entered an order on August 28, 1998,

finding that the prior order of the court “constitutes a

final, appealable Order.” It is from this order the Univer-

sity, Diocese, and Board appeal.

IV.

On appeal, the various appellants offer various

assignments of error. The Grandeottos argue the

Clarksburg fee is a tax which violates the Tax Limitation

Amendment,° due process, and equal protection. The

Diocese, University, and the Board argue they do not

have to pay because the federal government is immune

pursuant to United States v. City of Huntington, W.Va.,

supra, and W.Va. Code § 11-3-9 (1998) exempts them

from taxation along with the federal government. All

(S) Property used exclusively for divine worship;

(9) Property belonging to, or held in trust for, colleges,

seminaries, academies and free schools, if used for educational,

literary or scientific purposes, including books, apparatus,

annuities and furniture[.]

> W.Va. Const. art. X, § 1.

~ veel

App. 13

parties request that we revisit our prior decision, City of

Huntington v. Bacon, 196 W.Va. 457, 473 S.E.2d 743 (1996).

The question we must answer is whether the circuit

courts erred in determining the appellants must pay the

municipal and fire service fees which were assessed

against them.

In Bacon, the City of Huntington filed suit against the

Bacons, who were owners of buildings located in the City.

The Bacons refused to pay the municipal service fee. They

maintained the fee was a tax which violated the Tax

Limitation Amendment. The circuit court disagreed and

concluded the fee was a user fee which was properly

imposed pursuant to W.Va. Code § 8-13-13. This Court

affirmed the circuit court.

rhe City also brought a declaratory judgment action

against the Cabell County Board of Education, seeking to

determine whether the fee could be recovered from the

Board in light of United States v. City of Huntington, W.Va.,

supra. The question was certified to this Court, where it

was determined that county boards of education are

authorized to pay municipal service fees.

We note that the federal case, United States v. City of

Huntington, W.Va., supra, was written prior to this Court's

Bacon decision. The Bacon Court determined that munici-

pal service fees are indeed fees and not taxes. The Bacons

and the Board of Education were found to be subject to

the fee even though the federal government was not

obligated to pay pursuant to the Supremacy Clause, Arti-

cle VI, Clause 2 of the U.S. Constitution. By way of

explanation, this Court stated:

Bacon at 464-65, 473 S.E.2d at 750-51

holding did not apply to the Bacons or the Board of

Education. The same is true for the appellants in the case

SUD

App. 14

|[W]here a federal entity is involved, the federal

courts may determine whether a particular

funding mechanism employed by a state or its

political subdivision is, in fact, a tax[.]

It follows, therefore, that a state is not

bound by a federal court's characterization of a

State tax or fee when a federal right is not

involved. After all, as we have previously

stated, states are free to determine their own

fiscal policy as long as the fiscal policy does not

violate the Constitution of the United States

(citation omitted).

stidice

/uUuUICE

We reiterate this Court’s previous holding which

States

An ordinance which imposes a municipal

service fee pursuant to W.Va. Code, 8-13-13

[1971] upon the owners of buildings at an

annual rate plus a percentage based upon the

square footage of space contained in each struc-

ture on the lot for the sole purpose of defraying

the cost of fire and flood protection services is a

user fee rather than a tax and therefore, is not in

violation of the Tax Limitation Amendment

found in W. Va. Const. Art. X, § 1.

Syllabus Point 6, Bacon, supra.

We also reiterate that:

Pursuant to W.Va. Code, 18-5-9 [1933], a

county board of education is authorized to pay a

municipal service fee imposed by a municipality

The Fourth Circuit's

App. 15

for fire and flood protection services pursuant to

W.Va. Code, 8-13-13 [1971] in order to protect the

health of its pupils and in order to keep its

school grounds and buildings in good order.

Syllabus Point 8, Bacon, supra.

The circuit courts did not err in granting summary

judgment in favor of the Cities of Clarksburg, Hunt-

ington, and Wheeling. Accordingly, we affirm the respec-

tive judgments of the Circuit Court of Harrison County,

the Circuit Court of Cabell County, and the Circuit Court

of Ohio County.

No. 25143 —

No. 25401 -

No. 25402 -

Affirmed.

City of Clarksburg, a municipal corporation v.

Grandeotto, Inc., a corporation; Bernard ]. and

Kathy A. Folio; Mid-City Land Co.; Bernard J.

Folio dba Highrise Associates; Kathryn Folio;

Joseph Folio.

The City of Huntington, a West Virginia

municipal corporation v. Most Reverend Ber-

nard W. Schmitt, Bishop of the Roman Catho-

lic Diocese of Wheeling-Charleston.

Wheeling College, Inc., a West Virginia corpo-

ration, and the Most Reverend Bernard W.

Schmitt, Bishop of the Diocese of Wheeling-

Charleston v. The City of Wheeling, a munici-

pal corporaton AND The City of Wheeling, a

municipal corporation v. The Ohio County

Board of Education.

App. 16

MAYNARD, Justice, dissenting:

| dissent because I believe the Catholic Church, as

well as all churches, and all public and other schools are

exempt under W.Va. Code § 11-3-9 (1998) from paying

this wolfish tax which is cloaked in the garb of a sheepish

tee.!

First, | note the great importance of the municipal

taxes at issue here. Government performs no more impor-

tant service than providing its citizens with fire protec-

tion. This is a very basic and historical government

service, and one that private citizens are unable to under-

take for themselves. In order to provide this service, local

governments must staff fire departments with trained

personnel and provide these personnel with modern fire-

fighting equipment. This requires a lot of money. This

money is generated through the levying of taxes on those

who reap the benefits of effective fire protection. This is

at [sic] it should be.

However, Article X, § 1 of the Constitution of West

Virginia provides, in part, that “property used for educa-

tional, literary, scientific, religious or charitable pur-

poses ... may by law be exempted from taxation.” This

constitutional authorization is codified by the Legislature

in W.Va. Code § 11-3-9 (1998). Specifically, W.Va. Code

§ 11-3-9 provides, in pertinent part:

' I dissent specifically to this Court’s decisions in case

numbers 25401 and 25402 involving the Roman Catholic

Diocese, schools and boards of education. I believe there is no

reason the appellants in case number 25143 should not pay the

“fee” at issue since, unlike churches and schools, they are not

exempted under W.Va. Code § 11-3-9.

App. 17

(a) All property, real and personal,

described in this subsection, and to the extent

herein limited, is exempt from taxation

(1) Property belonging to the United States,

other than property permitted by the United

States to be taxed under state law;

(5) Property used exclusively for divine

worship;

(9) Property belonging to, or held in trust

for, colleges, seminaries, academies and free

schools, if used for educational, literary or sci-

entific purposes, including books, apparatus,

annuities and furniture]. ]

rhis code section derives, at least in part, from the recog

nition that those enumerated institutions which are sup

ported by the public, either through taxation or private

gifts, and that exist for the educational, literary, scientific,

religious, or charitable enrichment of society should ful

fill their missions absent the burden of taxation. This is

altogether fitting and proper. The majority, however,

resorts to semantic sophistry in order to avoid the unam-

biguous language of W.Va. Code § 11-3-9. In short, the

majority holds that a tax is not a tax when it is called a

fee.

In holding that if a tax is called a “fee” it can be

levied against those institutions lawfully exempt from

taxation, the Court opens wide the door for unlimited

government collection of so-called fees. Government's

penchant for taxation depends on its ability to devise

increasingly creative and expensive schemes to justify the

need for the levying of additional taxes. It will not be

App. 18

long now before legitimate “fees” for fire and flood pro-

tection are joined by more questionable “fees” such as

recreation fees, clean air fees, pollution fees, beautifica-

tion fees, road paving fees, garbage fees, cultural event

fees, parking fees, sporting event fees, and regatta fees.

Anyone doubting that such a proliferation of government

“tees” could and will occur need only look at the history

of taxation in the United States in the twentieth century

to be convinced. Also, while the above-mentioned “fees”

may be collected to pay for desirable things, these “fees”

should be labeled what they really are: taxes.

“The power to tax involves the power to destroy,”

noted Chief Justice John Marshall in McCulloch v. Mary-

land, 17 U.S. (4 Wheat) 316, 431, 4 L.Ed. 579 (1819). This is

also true of the power to collect “fees.” No matter what

you call it, the money taken from the Catholic Diocese

and the schools involved in this case means that there is

less money in the operating budgets of these institutions.

This is money that would otherwise be spent on teachers’

salaries, new textbooks, equipment, or building improve-

ments. In his oral argument before this Court, the lawyer

for the Ohio County Board of Education and Wheeling

Jesuit University contended that the board of education

will be forced to pay almost one million dollars a year out

of the school budget as a result of this “fee.” This “fee,”

therefore, is really a tax paid by the school children in

Ohio County to the detriment of their education. Regard-

less of whether the collection of the money is called a tax

or a fee, it has the same effect on the appellants’ finances.

Shakespeare wrote, “That which we call a rose by any

App. 19

other name would smell as sweet.”? The Bard’s words are

equally true regarding the noxious odor of taxes. That

which we call a tax by any other name smells just as bad.

In sum, I agree with the United States Court of

Appeals, Fourth Circuit in United States v. City of Hunt-

ington, West Virginia in its assessment that the Huntington

user fee “is a thinly disguised tax.” 999 F.2d 71, 74. |

believe this is true of all the fees involved here. Further,

the Court of Appeals held that the federal government is

immune from paying these exact same fees. Therefore, I

would hold that if the federal government is immune

from paying a “fee,” the other entities listed in W.Va.

Code § 11-3-9 are also. To say otherwise is a clear denial

of equal protection to the churches and schools. Sadly,

their recourse now must be to the federal courts to set

things right. Accordingly, I would find that W.Va. Code

§ 11-3-9 exempts the Diocese and the schools from paying

the “fees” at issue. This is clearly one instance in which

the Diocese should not be bound to render unto Caesar.

By holding to the contrary, the majority opinion opens the

door to additional taxes and an increasing burden on

those institutions that are, under our Constitution and by

law, exempt from such taxation.

I am authorized to state that Justice McCuskey joins

in this dissent.

2 Romeo and Juliet. Act Il, Sc. 2, Line 43.

App. 20

IN THE CIRCUIT COURT OF OHIO COUNTY,

WEST VIRGINIA

WHEELING COLLEGE, INC.,

ET Al )

Plaintiffs |

Vs ) CIVIL ACTION

CITY OF WHEELING, ) NO. 95-C-72W

Defendant 7

CITY OF WHEELING | AND

Plaintiff

Vs :

OHIO COUNTY BOARD OF ) CIVIL ACTION

EDUCATION, ) NO. 96-C-11

Defendant |

FINDINGS OF FACT, CONCLUSIONS

OF LAW AND ORDER

rhe Court, after reviewing the briefs, memoranda,

pleadings, joint stipulations, depositions, answers to

interrogatories and admissions on file, pursuant to Rule

56 of the W.V.R.Civ.P., makes the following Findings of

Fact and Conclusions of Law:

FINDINGS OF FACT

1. The City of Wheeling is a municipality organized

under the laws of West Virginia.

2. Under the authority of W.Va. Code Sec. 8-13-13,

the City of Wheeling has enacted an ordinance providing

hates

App. 21

for the payment of fire service fees by users of such

services. The ordinance is found in Article 793 of the

codified Ordinances of the City of Wheeling, West Vir-

ginia.

3. The City devised the following classifications for

distributing the cost of fire protection services. Owners of

residential unit structures are assessed a flat annual rate;

Owners of nonresidential unit structures are assessed a

rate based on the square footage of the building; and

tenants of nonresidential and residential unit structures

are assessed a flat fee.

4. Since July 1, 1993, the City of Wheeling has

imposed annual fire service charges, which charges do

not depend upon actual usage of the services of the City

of Wheeling Fire Department, as follows:

a. Upon the owners of non-residential buildings

and structures in the City in an amount equal to $0.068

per square foot contained in such building or structure;

b. Upon the owners or lessees of vehicles in the City

a flat fee of $10.00 per vehicle;

c. Upon the occupants, lessee or tenants of build-

ings or structures in the City, a flat charge of $25.00 for

each occupied unit, provided that with regard to hotels,

motels, dormitories, or other buildings intended primar-

ily for transient lodging, the flat fee of $25.00 for each

occupied unit shall be paid by the owner or [sic] such

unit or units; and

d. Upon the owners of residential buildings or

structures in the City a flat fee charge of $75.00 per

building or structure.

App. 22

5. Prior to July 1, 1993, the City of Wheeling

imposed annual fire service charges, which charges do

not depend upon actual usage of the services of the City

of Wheeling Fire Department, as follows:

a. Upon the owners of non-residential buildings

and structures in the City, in an amount equal to $0.053

per square foot contained in such building or structure;

b. Upon the owners or lessees of vehicles in the City

a flat charge of $10.00 per vehicle;

c. Upon the occupants, lessees or tenants of build-

ings or structures in the City, a flat charge of $25.00 for

each occupied unit, provided that with regard to hotels,

motels, dormitories, or other buildings intended primar-

ily for transient lodging, the flat fee of $25.00 for each

occupied unit shall be paid by the owners of such unit or

units; and

d. Upon the owners of residential building or struc-

tures in the City a flat fee charge of $63.77 per building or

structure.

6. The fire service fee is assessed on all owners and

tenants of real property and vehicle owners within the

City of Wheeling.

—

[he City of Wheeling ordinance does not provide

exemptions to the fire service fee to any party or class of

parties.

8. The City of Wheeling does not issue bills for fire

service charges for its own buildings or vehicles which

are titled in the name of the City. These facilities included

the sewage treatment plant, water department filtration

App. 23

plant, animal control shelter, Clator operations center,

and fire department headquarters and stations.

9. The Wheeling Housing Authority has made pay-

ments in lieu of property taxes pursuant to an agreement

dated February 28, 1958, to the City of Wheeling in the

following amounts for fiscal years 1991-96:

YEAR PAYMENTS

FY 95-96 $ 9,057.92

FY 94-95 $ 7,868.99

FY 93-94 $ 9,421.46

FY 92-93 $10,635.28

FY 91-92 $10,661.81

10. Wheeling Jesuit University (University) is recog-

nized as a tax-exempt entity for purposes of West Virginia

Code Sec. 11-3-9.

ll. The Board of kducation of Ohio County, West

Virginia (Board) is recognized as a tax-exempt entity for

purposes of Sec. 11-3-9 and Sec. 18-5-5.

12. The Roman Catholic Diocese of Wheeling-Char-

leston (Diocese) is recognized as a tax-exempt entity for

purposes of West Virginia Code Sec. 11-3-9 and includes

as educational institutions Central Catholic High School,

Corpus Christi Grade School, St. Michael Parish School,

St. Vincent DePaul Grade School, and Wheeling Catholic

Elementary School.

13. From its inception and at all times relevant to

these consolidated actions, the purpose of the fire service

fee has been to defray the expense of providing fire

protection services for the City of Wheeling.

App. 24

14. The proceeds from the fire serve [sic] fee do not

cover the costs of providing the City’s fire protection

services.

15. The College and Diocese commenced an action

against the City to prohibit the enforcement of the fire

service fee ordinance as to their respective properties on

the basis that the fee was an unconstitutional tax. The

City initiated a separate legal action against the Board to

collect delinquent fire service fees from the proceeds of

the sale of excess property of the Board. Subsequently,

these cases were consolidated by the Court and the Board

then joined with the College and Diocese as to the consti-

tutional arguments maintained by these entities.

CONCLUSIONS OF LAW

1) A municipal fee for fire protection established

pursuant to West Virginia Code 8-13-13 is not a tax;

2) There is no significant difference between the fire

service fee for the City of Huntington which was

approved in City of Huntington v. Bacon, 196 W.Va. 457,

473 S.E.2d 743 (1996), and the fire service fee in dispute in

this case;

3) Pursuant to the standards articulated with

unmistakable clarity by the Supreme Court of Appeals in

Racon, the Defendants are authorized to pay the fire ser-

vice fee imposed by the City of Wheeling;

4) The disputed and undisputed facts in this litiga-

tion do not permit this Court to undertake its own inter-

pretation of the law of the same legal issues considered

and decided in Bacon, or permit this Court to use the

—

App. 25

constitutional grounds asserted by the Defendants to

reinterpret the explicit mandate in Bacon that approved a

tire service fee for institutions similar to the Defendants;

and

5) Although there are facts in dispute, they are not

material facts. The Defendants have failed to make a

sufficient showing of a factual dispute on any essential

element in this case

ORDER

NOW, THEREFORE, it is so ORDERED that the City’s

Motion for Summary Judgment be, and hereby is

GRANTED IN PART as to the validity of the fire service

fee and liability for payment by the College, Diocese and

Board; and

IT Is FURTHER ORDERED that the Motion for Sum-

mary Judgment of the College, Board and Diocese be, and

hereby is, DENIED on the issue, and

IT IS FURTHER ORDERED that the following issues

are reserved for further consideration and action by the

Court; (i) the amounts owed by the College, the Diocese

and the Board; (ii) whether or not a binding settlement

existed between the City and the College and Diocese;

and (iii) whether the delinquent fire service fees of the

Board prior to the Bacon supra, decision are owed to the

City.

IT Is FURTHER ORDERED that counsel appear on

the 11th day of September, 1998 at 9:15 o’clock a.m. for a

conference on the issues remaining in this litigation.

A pp. 26

Che objections and exceptions of counsel for the par-

ties are so noted and preserved

ENTER this 19th day of August, 1998

s/ Ronald E. Wilson

Ronald E. Wilson, Judge

Copies forwarded to

Ronald M Musser, Esq

Peter K. Blume, Esq

john P. Bailey, Esq

James F. Companion, Esq

James C. Gardill, Esq

App. 27

IN THE CIRCUIT COURT OF

OHIO COUNTY, WEST VIRGINIA

WHEELING COLLEGE, )

INC., ET AL., )

Plaintiffs ) CIVIL ACTION NO.

) 95-C-72W

Vs )

CITY OF WHEELING, |

Defendant ) AND

)

CITY OF WHEELING, )

Plaintiff )

) CIVIL ACTION NO.

Vs 96-C-11

OHIO COUNTY BOARD )?

OF EDUCATION, )

)

Defendant )

ORDER

On August 25, 1998 came Wheeling College, Inc.,

Most Reverend [sic] Barnard [sic] W. Schmitt, and the

Ohio County Board of Education, by their respective

counsel, and moved this Court for an Order pursuant to

Rule 54(b) of the West Virginia Rules of Civil Procedure

finding that this Court’s Findings of Facst [sic], Conclu-

sions of Law and Order entered in the above styled

proceedings on August 19, 1998, fully adjudicated all

claims concerning the validity and constitutionality of the

City of Wheeling’s fire service charge, that there is no just

reason to delay, and that such Order constitutes a final,

appealable Order. On August 25, 1998 the City of Wheel

ing through its counsel, moved this Court to deny such

App. 28

motion. The City was given until August 27, 1998 to

supplement its opposition to the Motion for an Imme-

diately Appealable Order, which was filed accordingly

with the Court

rhis Court, being of the opinion that such motion

should be granted, does hereby find that this Court’s

Findings of Facst [sic], Conclusions of Law and Oroder

[sic] entered in the above styled proceedings on August

19, 1998, fully adjudicated all claims concerning the val-

idity and constitutionality of the City of Wheeling’s fire

service charge, that there is no just reason to delay, and

that such Order constitutes a final appealable Order

‘he Clerk is directed to transmit attested copies of

this Order to all counse! of record in the customary

manner

ENTER this 28th day of August, 1998

s/ Ronald E. Wilson

Ronald E. Wilson, Judge

A ¢ Opy, Teste

s [llegible

Circuit Clerk

App. 29

STATE OF WEST VIRGINIA

At a Regular Term of the Supreme Court of Appeals

continued and held at Charleston, Kanawha County, on

the 28th day of January, 1999, the following order was

made and entered:

City of Clarksburg, a municipal

corporation, Plaintiff Below,

Appellee

vs.) No. 25143

Grandeotto, Inc., a corporation;

Bernard J. and Kathy A. Folio;

Mid-City Land Co.; Bernard J. Folio,

d/b/a Highrise Associates; Kathryn

Folio; Joseph Folio, Defendants

Below, Appellants

AND

[he City of Huntington, a West Virginia

municipal corporation, Plaintiff Below.

Appellee

vs.) No. 25401

Most Reverend Bernard W. Schmitt, Bishop

of the Roman Catholic Diocese of Wheeling-

Charleston, Defendant Below, Appellant

AND

Wheeling College, Inc., West Virginia

corporation, and the Most Reverend

Bernard W. Schmitt, Bishop of the

Diocese of Wheeling-Charleston, Plaintiffs

Below, Appellants

App. 30

vs.) No. 25402

The City of Wheeling, a municipal

corporation, Defendant Below, Appellee

AND

The City of Wheeling, a municipal

corporation, Plaintiff Below, Appellee

Vs.

The Ohio County Board of Education,

_Detendant Below, Appellant

The Court, having maturely considered the petition

for rehearing and reargument filed by the appellants,

Wheeling College, Inc., a West Virginia corporation, the

Most Reverend Bernard W. Schmitt, Bishop of the Diocese

of Wheeling-Charleston, and the Ohio County Board of

Education, and the written response filed in opposition

thereto, and the petition for rehearing and reargument

filed by the appellants, Grandeotto, Inc., a corporation,

Bernard J. and Kathy A. Folio, Mid-City Land Co., Ber-

nard J. Folio, d/b/a Highrise Associates, Kathryn Folio,

and Joseph Folio, in the above-captioned cases is of opin-

ion to, and doth hereby, deny the petitions for rehearing.

Justices Maynard and McGraw would grant.

A True Copy

Attest: /s/ Illegible

Clerk, Supreme Court of Appeals

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.