Petition for Writ of Certiorari — Wheeling College, Inc. v. City of Wheeling
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Court,
FILED
Ne. 9 Sl7ZZ O APR 26 OY
OFFICE OF THE CLERK
In The
Supreme Court of the United States
October Term, 1998
e
THE MOST REVEREND BERNARD W. SCHMITT,
Bishop of the Roman Catholic Diocese
of Wheeling-Charleston,
Petitioner,
THE CITY OF HUNTINGTON, WEST VIRGINIA,
a municipal corporation,
Respondent.
7 a
On Petition For Writ Of Certiorari To The
Supreme Court Of Appeals Of West Virginia
*
PETITION FOR WRIT OF CERTIORARI
»
CuirrorD B. Levine, Esq. James C. GaARDILL
Counsel of Record Puiturs, GARDILL, KAISER
Stuart C. GAUuL, JR. & ALTMEYER
THorp, Reeo & 61 Fourteenth Street
ARMSTRONG, LLP Wheeling, WV 26003
One Riverfront Center (304) 232-6810
Pittsburgh, PA 15222
(412) 394-7711 G. Nicuotas Casey, Jr.
Wesster J. ARCENEAUx, III
Lewis, FRIEDBERG, GLASSER,
Casey & Rouuins, L.L.P.
Suite 700 —- One Valley
Square
P.O. Box 1746
Charleston, WV 25326-1746
(304) 345-2000
COCKLE LAW BRIEF PRINTING CO., (800) 225-6964
OR CALL COLLECT (402) 342-2831
114°
Oe De mal
PTT
‘ee ese
QUESTIONS PRESENTED FOR REVIEW
1. Whether the Supreme Court of Appeals of West
Virginia, as a state court of competent jurisdiction, erred
in not following the holding of this Court in Howlett v.
Rose, 496 U.S. 356 (1990) by not hearing and ‘etermining
issues presented to it that arose under the U.S. Constitu-
tion.
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 Huntington, West
Virginia 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. v. Webster County, West Vir-
ginia, 488 U.S. 336 (1989) in not holding that the City of
Huntington violated the Equal Protection Clause of the
Fourteenth Amendment by attempting to assess a prop-
erty tax against the Diocese 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 both the
Diocese and the federal government in the same class of
property owners wholly exempt from taxation on prop-
erty.
4. Whether the Supreme Court of Appeals of West
Virginia erred in disregarding this Court’s decision in
il
QUESTIONS PRESENTED FOR REVIEW - Continued
Allegheny Pittsburgh Coal Co. v. Webster County, West Vir-
ginia, 488 U.S. 336 (1989) in not holding that the City of
Huntington 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.
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., ___
We. Vee eae. (1996):
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 corpora-
tion
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
Rare CE SIRES. WREAOEN kinks sch desnnn vabeeenebans ili
TABLE OP CAPCT OG ic 5s si ecas cde deba ven eesees) iv
SAR Ce PAG ROMINE SEDs ind owe e eat nei ine ae awe vii
SPECIES MAAN cb dncoccrasciFend anckinns jiasvun 1
STATEMENT OF JURISDICTION. .........000ccceee. 1
CONSTITUTIONAL PROVISIONS, STATUTES AND
ORDINANCES INVOLVED 00005 ccassnetiiaeenes 2
SIATEMEIN: OF THE CARB... cece ccscncccsiccutnes 5
A. Factual DACKRIOUNG V. socss iickewiiand chines, 5
PE NRO ers Peer Pes een ey ree 5
2. West Virginia’s Statutory Exemption From
PE Or eee re ree ye sry Pet yee Terre 5
3. The City of Huntington’s Assessment for Fire
WON CUING ahs ce'vc hr eee hae ASY wee ROS CaaS 6
DB. PROCRGUIAL TEMIOND ... nec cc dakedoaeteiceerees 7
1. Proceedings in the Circuit Court of Cabell
COMED, TURN VINMIIES 5 ois 5 Uoiwy eveseeetaens 7
2. Petition for Appeal to the Supreme Court of
Appensts of West Virgius. . oo. .5.scsewscais: 8
3. The Decision of the Supreme Court of
FONE oo sine cs kens bby eae cnesgdbelaeensehs 9
4. Motion for Reconsideration................. 11
ee
TABLE OF CONTENTS — Continued
REASONS FOR GRANTING THE WRIT ...........
A.
B.
In Not Addressing and Resolving the Bishop’s
Assignment of Error Arising Under the U.S. Con-
stitution, the Supreme Court of Appeals Over-
looked the Clear Teachings of this Court ......
To the Extent, if Any, that the Supreme Court of
Appeals Addressed the Constitutional Issues
Raised by the Bishop, It Created a Conflict with
the Decisions of the U.S. Court of Appeals for the
Fourth Circuit by Deciding that the Service Fee is
a User Fee, Rather than a Tax, for Purposes of
Se eC eee NR Pere rer ror Try er
1. Under the Supremacy Clause, the Question of
Whether the Service Fee is a “Tax” for Pur-
poses of the Equal Protection Clause is to be
Determined by Reference to 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 Supreme Court of Appeals Acted Contrary
to the Teachings of this Court when it Failed to
Hold that the City’s Application of the Service
Fee to Real Property Owned by the Diocese Vio-
lated the Diocese’s Rights Under the Equal Pro-
tection Clause of the U.S. Constitution.........
1. The Law of West Virginia Does Not Distin-
guish Between the Property Owned by the
Diocese and Property Owned by Entities of
the Federal Government in Any Manner That
Would Allow the City to Assess the Service
Fee Against One But Not the Other........
13
20
21
22
24
vi
TABLE OF CONTENTS —- Continued
Page
2. The City’s Levying of the Service Fee 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 .........6000eeeee: 28
CONCTAIIION ic; os cy ee Bdsv esc cancer 30
ADPROIER 6 55:5 oanssa sc ccrietes sear ie App. 1
vii
TABLE OF AUTHORITIES
Page
Cases
Allegheny Pittsburgh Coal Co. v. County Commission-
ers of Webster County, West Virginia, 488 U.S. 336
CR Wi cba boc veer e hob cet dkbptstincdass iieue passim
Arbogast v. Arbogast, 174 W. Va. 498, 327 S.E.2d 675
SE «ode dv cbee Ves deh bN rs eter ea wasteawieee 13
Burris v. City of Little Rock, 941 F.2d 717 (8th Cir.
og: | RIE A Pn 5 SP ee ew OPER y re pee en Sea Ger roe 23
Capitol Cablevision Corp. v. Hardesty, 168 W. Va.
Gaky Oe Ge WEE CAPE bic sc cnconncevcebescaces 15
Carpenter v. Shaw, 280 U.S. 363 (1930)............... 21
Central Realty Co. v. Martin, 126 W. Va. 915, 30
UE ho fnke 564-45 0 ahd ss cede ciceeas sees 15
City of Clarksburg v. Grandeotto, Inc., __. W. Va. __,
5's Tn 2 ts ee ws en oS aay cise a chub esdeewn 1,9
City of Fairmont v. Pitrolo Pontiac-Cadillac Co., 172
W. Va. 505, 308 S.E.2d 527 (1983), cert. denied,
gk Be gy | Se ere rears 28
City of Huntington v. Bacon, 196 W. Va. 457, 473
S.E.2d 743 (W. Va. 1996).......... 6, 7, 10, 14, 16, 23
Clafin v. Houseman, 93 U.S. 130 (1876)..............- 17
Collins Holding Corp. v. Jasper County, South Caro-
am; BES Beek Fer Ce Ce F088) vc oa vegciaess vie 23
Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938) ..... 13
Felder v. Casey, 487 U.S. 131 (1988)............... 12, 14
Vill
TABLE OF AUTHORITIES — Continued
Page
Folio v. City of Clarksburg, 134 F.3d 1211 (4th Cir.
POS se cnneeent sed aa ewes 03 04a Giawe 12; 3D, bee. 22
Garrett v. Moore-McCormack, Co., 317 U.S. 239
CREE Vedi weds cei ias beau Wars eRe oO ce e Arse We 14
Hare v. City of Wheeling, 171 W. Va. 298, 284 S.E.2d
Bet CE as 65 eos dee eas his hocks ee 28
Hillsborough v. Cromwell, 326 U.S. 620 (1946)......... 24
Howlett v. Rose, 496 U.S. 356 (1990)
ineven Peds ees mae ase ieee eae 12, 14, 15, 16, 17, 18, 20
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.
9% CHO... ks kc Se eee 19
Indiana Waste Sys., Inc. v. County of Porter, 787
rome. Ga UNA. GG. S50 ar. <s kcvsesrcinsn Connie’ 23
Kentucky Unton Co. v. Kentucky, 219 U.S. 140 (1911) .... 24
Metropolitan Life Insurance Ceo. v. Ward, 470 U.S. 869
CER A do cur shade v:dwkbice Oe 85 Cah be eek beens eens 24
Nordlinger v. Hahn, 505 U.S. 1 (1992)................ 26
Public Service Comm'n of Utah v. Wycoff Co., Inc.,
Ke he 2). | Ba ene a eg en anv 13
San Juan Cellular Tel. Co. v. Public Services Comm'n,
G7 Fa Me TOOO ie, FORE 0 nck vs vcs kat vieks wkphan 23
United States v. City of Columbia, Missouri, 914 F.2d
Se le, AOD Wa ca vce tssued bua tiaeee eae: 23
United States v. City of Huntington, 999 F.2d 71 (4th
Cir. 1993), cert. denied, 510 U.S. 1109 (1994)
+6 dnb auinien eed VEO AWE PERERA COR Cel 44 ay Bhs ahs 2a Oe
we ? .
tenn
ix
TABLE OF AUTHORITIES — Continued
Page
CONSTITUTIONS
Rs i ee eS ae 7 ie Sie Ro
Si GE, NEE: RW ME Ros vioccuivacseees ceva passim
Waa: Pas Rs AEE, Fees SOO 5 b5 ok ia os we eho acess deans 14
iy ks a Ns as ES chee ska tsaens sede. 6, 25, 28
STATUTES
Me Bas Ae NE oe bk ha ee se ce he coke Cepeeeeeenae. 5
Be a Oe a oa ines cen h a neve ia ced nedhcn ces 1
Ss BR ek Sahib 55 a Secs eka eeieeials $3, Za» Zo
ak bs halle, Te. PE PRB yh anetrte eae aree 16, 17, 18
Wes Wis ee ESE ec ckceesee sen Be rhee eee a Ca 5
Wes ls Se PE F685 Cie Si ves ep one Pee wseAS 2, 9, 27
W. Va. Code © 13-39 2 ccc cc cccne’ 3, 4, 6, 7, 10, 15, 26
Wie WU Coe OE TN sas Sake depaveicavbewedvraess xs 14
RULES
Sy BE eral cvkd Geers bes ee h ees Rise wewereesses 11
ORDINANCES
Codified Ordinances of the City of Huntington,
Be fo RE EN rg TELE Pee OUEST EPCLE TL OLE 4,5, 6
1
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 °74967 and is reprinted
below at Appendix at 1-19. That court’s order denying
the Petitioners’ petition for rehearing is also not generally
reported and is reproduced at Appendix at 31-32.
The relevant opinion and orders of the Circuit Court
of Cabell County, West Virginia are unreported. That
Court's June 4, 1998 Order granting judgment on liability
in favor of the City of Huntington and denying Bishop
Schmitt’s motion for summary judgment is reprinted at
Appendix at 20-26. Its June 12, 1998 Order entering judg-
ment for the City is reprinted at Appendix at 27-30.
STATEMENT OF JURISDICTION
The Petitioner seeks a writ of certiorari to the
Supreme Court of Appeals of West Virginia for review of
the December 14, 1989 decision of that court in City of
Clarksburg v. Grandeotto, Inc., ___ W. Va. Rae cree + 4% . ae
(1998).! That court denied the Bishop’s petition for
rehearing on January 28, 1999.
The jurisdiction of this court arises under 28 U.S.C.
§ 1257.
' Simultaneously with the filing of this Petition, the Bishop
and the other parties to a similar challenge to the validity of the
City of Wheeling’s Fire Services Fee are petitioning this Court
for a writ of certiorari seeking review of this same decision,
which also affirmed a judgment in favor of the City of Wheeling.
2
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
protection 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
3
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. The municipality shall not, however, have a
lien on any property as security for payments due under
such ordinance... .
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 foundation or corpora-
tion which receives contributions exclusively 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;
* * *
(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 therefrom
are used or devoted to educational purposes
of such college or university;
* * *
CODIFIED ORDINANCES OF THE CITY OF
HUNTINGTON
§ 773.02
For the purposes of this article, “user of municipal
services” and “user” refers to any person, firm, cor-
poration or governmental entity of any kind owning
any building or structure, whether residential, com-
mercial, governmental or otherwise, within the limits
5
of the City which benefits from fire and/or flood
protection services provided by the City.
§ 773.03
On or after July 1, 1991, there is hereby imposed
upon all users of municipal services a municipal
service fee for each lot or parcel of land containing
any building or structure owned by each user. The
fee shall be imposed at an annual rate of eighty
($80.00) dollars per lot plus $0.0575 per square foot of
each building or structure existing on each such lot.
STATEMENT OF THE CASE
A. Factual Background
1. The Parties
The Diocese is exempt from federal taxes under section
501(c)(3) of the internal Revenue Code, 26 U.S.C. § 501(c)(3).
Among its many activities throughout the State, the Diocese
operates two schools within the City. The Diocese owns the
real estate on which these schools sit.
The City of Huntington (the “City”) is a municipal
corporation organized pursuant 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
6
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?
As the Bishop and the City agree, the Diocese is
exempt under this section from any taxes levied by the
City. There 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 Huntington’s Assessment for Fire
Services
The City nominally assesses a Fire Services Fee (the
“Service Fee”) on all real property in the City. See City of
Huntington Ordinance § 773.07 (assessing a Service Fee
against each “user” of real property); id. at § 773.02
(defining “user” as any owner of a structure within the
City). The Service Fee is assessed as a flat fee on each lot
and an additional amount for each square foot of floor
space in any building or buildings erected on the lot. See
City of Huntington v. Bacon, 196 W. Va. 457, 473 S.E.2d 743,
747 (1996).
Although all property owners in the City are theo-
retically subject to the Service Fee, the City’s practice in
collecting the Service Fee has been very different. The
City does not bill or otherwise attempt to collect the
2? The West Virginia legislature amended W. Va. Code
§ 11-3-9 in 1998, while this action was pending before the Circuit
Court of Cabell 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.
7
Service Fee from the federal government for any of the
property that the federal government owns within the
City. See United States v. City of Huntington, 999 F.2d 71
(4th Cir. 1993) (holding that City was barred by Suprem-
acy Clause of U.S. Constitution from collecting service fee
from federal government), cert. denied, 410 U.S. 1109
(1994). In addition, the City does not assess or otherwise
collect the Service Fee on the property it owns.
B. Procedural History
1. Proceedings in the Circuit Court of Cabell
County, West Virginia
The City commenced its action against the Bishop in
the Circuit Court of Cabell County, West Virginia (the
“Circuit Court”) in 1997. It sought payment of the Service
Fee assessed against the Diocese’s two schools in the City
between May 1, 1992 and April 24, 1997. The Bishop
moved for summary judgment, arguing in part that this
Court had conclusively determined in Bacon that the Ser-
vice Fee as in force prior to June 1994 was a tax pursuant
to § 11-3-9. The Bishop further argued that, because the
West Virginia Legislature had exempted the Diocese 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 Service Fee from the Diocese while foregoing
any effort to collect it from the federal government vio-
lated the Diocese’s rights under the Equal Protection
Clause of the U.S. Constitution. He argued that, because
federal law rules of decision clearly indicated that the
Service Fee was a tax, and because the current enforce-
ment scheme would never equalize the amount that the
8
Diocese paid with the amounts that the federal govern-
ment paid on similar properties, the Service Fee could not
validly be applied to the Diocese.
The Circuit Court granted the Bishop’s motion on
July 21, 1997 with regard to the pre-June 1994 Service Fee.
However, it deferred a ruling on the remaining issues
raised by that motion.
The Circuit Court ruled against the Bishop and in
favor of the City on the remaining issues in June 1998. It
acknowledged that the City did not actually collect the
Service Fee from the federal government or from itself
and further recognized that the ordinance establishing
the Service Fee did not recognize any exceptions for those
property owners. However, the court reasoned, this
uneven enforcement of the Service Fee was excused
under the Supremacy Clause of the U.S. Constitution and
by the City’s contribution of “additional funds” to pro-
vide the covered services. Appendix at 23-24. Therefore,
the Circuit Court concluded, the City’s practice did not
violate the Equal Protection Clause.
2. Petition for Appeal to the Supreme Court of
Appeals of West Virginia
On October 6, 1998, the Bishop petitioned the
Supreme Court of Appeals of West Virginia (the
“Supreme Court of Appeals”) for appeal of the Circuit
Court’s judgment. He offered only one assignment of
error:
The court below erred in failing to hold that the
City’s application of the municipal service fee to
property owned by the Diocese, but not to prop-
erty owned by the federal government, violated
the Diocese’s rights under the Equal Protection
Clause of the U.S. Constitution.
CET TRTE se a ET ST OT
9
By Order of October 15, 1998, the Supreme Court of
Appeals granted the petition and consolidated this
appeal with Wheeling College, Inc., et al. v. City of Wheeling,
in which the Bishop, Wheeling Jesuit University and the
Ohio County Board of Education sought review of a
decision of the Circuit Court of Ohio County, West Vir-
ginia that presented a similar issue. The court consoli-
dated these cases for argument with City of Clarksburg v.
Grandeotto, Inc.,5 which had previously scheduled for
argument on November 10, 1998, and issued an expedited
briefing schedule under which the petition for appeal
was to be treated as a brief on the merits. The City filed
its brief by the court’s deadline.
The Bishop and the other parties to the Ohio County
action 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 issues arising under federal law, the
Bacon decision alore could not be determinative of the
appeal. The Bishop further restated his argument that
Huntington’s practice, even if authorized by state law,
violated the Equal Protection Clause.
3. The Decision of the Supreme Court of Appeals
On December 14, 1998, the Supreme Court of
Appeals issued a per curiam decision affirming the deci-
sions below. Appendix at 1-15. The per curiam opinion
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.
ee es
10
ignored the Bishop’s 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 dis-
tinguished United States v. City of Huntington, 999 F.2d at
73, in which the Fourth Circuit had held that Huntington
could not collect the Service Fee on property owned by
the federal government, 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 appel-
lants in the case sub judice.” Appendix at 14. The court
then restated syllabus points from Bacon but 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).
=
ne a ge
ll
4. Motion for Reconsideration
The Bishop filed a Petition for Rehearing with the
Supreme Court of Appeals on January 13, 1999.4 The
Bishop submitted that the Supreme Court of Appeals had
erred in overlooking and not resolving their assignments
of error arising under the U.S. Constitution. He 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. v.
County Commissioners of Webster County, West Virginia, 488
U.S. 336 (1989). He further submitted that the court had
erred in not concluding that the City’s scheme of taxing
them while treating the federal government as exempt
from the Service Fee violated their right to equal protec-
tion.
The Supreme Court of Appeals denied the petition
for rehearing on January 28, 1999. See Appendix at 31-32.
Although one of the justices who dissented from the
Supreme Court of Appeals’ 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 32.
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
* The Bishop and the other appellants in the Ohio County
action joined in the Petition for Rehearing with regard to the
Supreme Court of Appeals’ affirmance of that decision.
12
neither controlling nor fully measuring the
Court's discretion, indicate the character of the
reasons the Court considers:
* * *
(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;
(c) a state court or a United States court of
appeals has decided an important question of
federal law that has not been, but should be,
settled by this Court, or has decided an impor-
tant federal question in a way that conflicts with
relevant decisions of this Court.
ie
a Breet
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 Bishop’s 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.
v. County Commissioners of Webster County, West Virginia,
488 U.S. 336 (1989) that, where a state’s law directs that |
i
eRe nea na NNER
13
all taxes upon property 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 Bishop’s
Assignment of Error Arising Under the U.S. Consti-
tution, the Supreme Court of Appeals Overlooked
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.”).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,
14
The Supreme Court of Appeals therefore had “a con-
stitutional 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 (quoting
Garrett v. Moore-McCormack, Co., 317 U.S. 239, 245, 63 S.Ct.
246, 251 (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 Bishop’s federal constitutional claims. The
State of West Virginia has clearly vested the Supreme
Court of Appeals with jurisdiction to consider challenges
to the validity, both facially and as applied, of municipal
taxes and user fees. See W. Va. Const. art. VIII, § 3 (setting
forth that Supreme Court of Appeals “shall have appel-
late jurisdiction 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
exercise 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
constitutionality of a law). Consistent with this jurisdic-
tion, the Supreme Court of Appeals has previously heard
and determined tax issues. See, e.g., Bacon, 473 S.E.2d at
748-49 (considering both circuit court’s grant of summary
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)).
15
judgment and question certified by circuit court on val-
idity 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).
It has also heard 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, the Supreme Court was required
to consider the Bishop's federal claims and to apply fed-
eral law to them.®
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 The
Supreme Court of Appeals never explained its failure to
consider the federal issue. It did not decide the state-law
® This duty of the state courts to hear and decide these
federal constitutional issues is particularly strong here, as the
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.
” 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.
16
claims presented to it in Bacon on the basis of any ques-
tion 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 Hunt-
ington’s municipal service fee was a user fee and not a
tax. See generally 473 S.E.2d at 751-54. The Bishop is not
aware of any “rule of judicial administration” that might
properly have precluded consideration by the court
below of the federal-law challenge to the Service Fee.
The 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
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.
17
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, 110 S.Ct. at 2438 (quoting Clafin v. Houseman, 93
U.S. 130, 136-37 (1876)) (alteration in original). Therefore,
the Court reasoned, 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 “inconsistent with or violate[ ] federal law,”
i.e., it could not be based upon either a disagreement with
18
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 Supreme Court of Appeals here. Not only did the
amount in controversy exceed that court’s jurisdictional
minimum, the West Virginia legislature also expressly
authorized the court to hear appeals to the validity of
taxes and appeals of constitutional issues. Again, the
court offered no excuse or explanation for its failure to
19
consider the federal-law issues. It erred in restricting its
inquiry to issues of state law.
By failing to address the Bishop’s constitutional chal-
lenge to the Service Fee, 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 Web-
ster County, West Virginia, challenged the county’s sys-
tem 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 Co. v. County Commissioners of Webster County, West
Virginia, 488 U.S. 336 (1989). However, its substantive
analysis 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
20
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 and Allegheny Pittsburgh Coal, the
Supreme Court of Appeals has overlooked the presence
of a federal-law issue here. The Bishop therefore respect-
fully requests that this Court accept review of the deci-
sion below.
B. To the Extent, if Any, that the Supreme Court of
Appeals Addressed the Constitutional Issues
Raised by the Bishop, It Created a Conflict with the
Decisions of the U.S. Court of Appeals for the
Fourth Circuit by Deciding that the Service Fee is a
User Fee, Rather than a Tax, for Purposes of Federal
Law.
The Bishop does not believe that the decision of the
Supreme Court of Appeals addressed the federal-law
aspects of their challenge to the Service Fee. 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 Bishop, 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
21
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 Service Fee is a “Tax” for Purposes
of the Equal Protection Clause is to be Deter-
mined by Reference to Federal Law.
The Bishop has alleged throughout this action that
the City’s efforts to collect the Service Fee from the
Diocese violates its rights under the Equal Protection
Clause of the Fourteenth Amendment to the U.S. Consti-
tution. 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 decision. In Carpenter v. Shaw, 280 U.S. 363,
367-68 (1930), this Court looked to federal law to deter-
mine 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,
a a a
22
999 F.2d at 74, the court looked to federal law in conclud-
ing that the Service Fee was a tax that, under the Suprem-
acy 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. The court again relied on a federal-law definition of
“tax” in deciding that the Tax Injunction Act, 28 U.S.C.
§ 1341, precluded the federal courts from considering at
all whether Clarksburg’s collection of its fire protection
fee violated the Fourteenth Amendment’s Equal Protec-
tion and Due Process Clauses. 134 F.3d at 1217.
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
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 held that the Service Fee is a
tax for purposes of federal law. United States v. City of
Huntington, 999 F.2d at 74. In reaching this conclusion, the
court considered “all the facts and circumstances . . . and
8 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.
Sennen ea
23
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)).
The Fourth Circuit repeated this conclusion in its
1998 decision in Folio. In holding that a similar fee
enacted by the City of Clarksburg was a tax for purposes
of the Tax Injunction Act, 28 U.S.C. § 1341, 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 Ser-
vice Fee. 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 Service Fee was a tax, its
holding created a conflict with the Fourth Circuit. This
24
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 Service Fee to
Real Property Owned by the Diocese Violated the
Diocese’s 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
“select[ed 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)).°
Here, the City’s effort to collect the Service Fee from
the Diocese fails to afford it the equal protection of West
* 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).
25
Virginia’s laws. In contravention of explicit State statu-
tory language that places the Diocese and the federal
government in a single class, the City has persisted in
assessing the Service Fee against the Private Plaintiffs
and the Board but not against the federal government.
Moreover, because the City seeks to collect the Service
Fee from the Diocese on the basis of the square footage of
the buildings on its property, it would violate the guaran-
tee of Article X, Section 1 of the West Virginia Constitu-
tion 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
Court of Appeals reversed that decision, and this Court
granted certiorari. Id. at 342.
This 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
26
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, this 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 Diocese
and Property Owned by Entities of the Federal
Government in Any Manner That Would Allow
the City to Assess the Service Fee Against One
But Not the Other.
The City’s scheme for assessment of the Service Fee
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 Bishop and the City have agreed that the
property on which the City is attempting to impose the
Service Fee is within this single, exempt class of property.
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.
27
They have also agreed that real property owned by the
federal government and its instrumentalities (principally
the GSA) is within this class, as well.
The City does not treat Diocesan property and feder-
ally-owned property in the similar manner required by
the Equal Protection Clause. The City admits that it does
not collect the Service Fee from instrumentalities of the
federal government. The reason is because the federal
courts have recognized that this so-called user fee is
nothing more than a disguised property tax. The effoct 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
County Pittsburgh Coal and is similarly invalid under the
Equal Protection Clause.!!
11 Even if federal law were to lead to the conclusion that the
Service Fee 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
28
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 Service Fee is assessed against
some ostensibly exempted property owners but not
against others. As applied to the Diocese, this system
violates the Equal Protection Clause and must be struck
down.
2. The City’s Levying of the Service Fee 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 Service Fee 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,
104 S.Ct. 2169 (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 Service Fee on the basis of square footage,
rather than valuation. However, Article X, Section 1 of the
federal property should be exempt from those fees. Similarly,
the City has made absolutely no effort to classify federally
owned property differently from property owned by any other
person or entity.
29
West Virginia Constitution guarantees that property in
West Virginia will be taxed only on the basis of its
assessed value. Moreover, as discussed above, the Service
Fee must be considered a tax in evaluating whether it
violates the Equal Protection Clause.
The Service Fee 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 Service Fee 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 Diocese 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 Service Fee 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.
30
CONCLUSION
For the reasons stated above, the Bishop respectfully
requests that this Court grant this petition, issue a writ of
certiorari to the Supreme Court of Appeals and, upon
review, reverse the decision below.
Respectfully submitted,
CurrorD B. Levine, Esq.
Counsel of Record
Stuart C. GAuL, Jr.
THorp, Reep & ARMSTRONG, LLP
One Riverfront Center
Pittsburgh, PA 15222
(412) 394-7711
James C. GARDILL
Puiturps, GARDILL, KAISER
& ALTMEYER
61 Fourteenth Street
Wheeling, WV 26003
(304) 232-6810
G. Nicuotras Casey, Jr.
Wesster J. ARCENEAUx III
Lewis, FREIDBERG, GLASSER,
Casey & Ro.uns, L.L.P.
Suite 700 —- One Valley Square
P.O. Box 1746
Charleston, WV 25326-1746
(304) 345-2000
App. 1
IN THE SUPREME COURT OF APPEALS
OF WEST VIRGINIA
September 1998 Term
No. 25143
CITY OF CLARKSBURG,
A MUNICIPAL CORPORATION,
Appellee
v.
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,
Appellants
Appeal from the Circuit Court of Harrison County
Honorable Thomas A. Bedell, Judge
Civil Action Nos. 93-C-609-2, 93-C-648-2, 93-C-706-2,
93-C-707-2, 94-C-184-1 & 94-C-196-2
(Filed Dec. 15, 1998)
AFFIRMED
AND
App. 2
No. 25401
THE CITY OF HUNTINGTON,
A WEST VIRGINIA CORPORATION,
Appellee
v.
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
App. 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
v.
THE CITY OF WHEELING,
A MUNICIPAL CORPORATION,
Appellee
AND
THE CITY OF WHEELING,
A MUNICIPAL CORPORATION,
Appellee
v.
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-11
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
Jendonnae Houdyschell, Esq.
City of Huntington
Steve Fanok, Esq.
City of Morgantown
Joe DiBartolomeo, Esq.
City of Weirton
Mark Matkovich, Esq.
City 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).
GC i
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
soi la ne eT Carpe a acl | 2, Saale a hl him oi alot einen ate A.
' 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).
Neigh
App. 8
determined by the court to be a final, appealable order by
order entered August 28, 1998.
The 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
2 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.
The individual landowners refused to pay the fire
protection fees assessed against their various properties.
The 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
City’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.
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.
lil.
The 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 Grundeottos 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
(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 scientific purposes, including books, apparatus,
annuities and furniture[.]
5 W.Va. Const. art. X, § 1.
© See supra note 4.
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.
The 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:
App. 14
[Where 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).
Bacon at 464-65, 473 S.E.2d at 750-51. The Fourth Circuit’s
holding did not apply to the Bacons or the Board of
Education. The same is true for the appellants in the case
sub judice.
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
Sen? Eee a BOA ee ee ie Le
Re I OAS
i A heh
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.
Affirmed.
No. 25143 - City of Clarksburg, a municipal corporation v.
Grandeotto, Inc., a corporation; Bernard J. and
Kathy A. Folio; Mid-City Land Co.; Bernard J.
Folio dba Highrise Associates; Kathryn Folio;
Joseph Folio.
No. 25401 - 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.
No. 25402 - 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:
I 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
fee.!
First, I 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:
1 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.
Slee
a fle Oi
FTN ONL RT a a te Rae bie
eS ere it
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[.]
This 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
“fees” 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. I
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 II, Sc. 2, Line 43.
App. 20
IN THE CIRCUIT COURT OF CABELL COUNTY,
WEST VIRGINIA
THE CITY OF HUNTINGTON,
a West Virginia Municipal
Corporation,
Plaintiff,
v. CIVIL ACTION NO. 97-C-320
(Judge David Pancake)
MOST REVERENT BERNARD W. SCHMITT,
BISHOP OF THE ROMAN CATHOLIC
DIOCESE OF WHEELING-CHARLESTON,
Defendant.
ORDER
CAME ON A PREVIOUS DAY, to-wit: Tuesday, May
19, 1998, the City of Huntington, by its counsel, Jendon-
nae L. Houdyschell, City Attorney, and the Defendant,
Most Reverent Bernard W. Schmitt, Bishop of the Roman
Catholic Diocese of Wheeling-Charleston, by counsel,
Sandra K. Henson and Michael A. Woelfel.
The Court, after review of the Memoranda filed by
the parties and after hearing the arguments of counsel,
does hereby find as follows:
Collateral Estoppel
1. Four conditions must be met in order for
collateral estoppel to bar a claim. (1) The
issue previously decided is identical to the
one presented in the action in question; (2)
there is a final adjudication on the merits of
the prior action; (3) the party against whom
the doctrine is invoked was a party or in
App. 21
privity with a party to a prior action; and (4)
the party against whom the doctrine is
raised had a full and fair opportunity to
litigate the issue in the prior action. State v.
Miller, 194 W.Va. 3, 459 S.E.2d 114 (1995).
Upon reviewing the memoranda and arguments of
counsel the Court finds that applying the above criteria
collateral estoppel does not apply in this case. First of all,
the same issues are not before this Court as were in the
case styled The City of Huntington v. SGM, Inc., et al., Civil
Action No. 91-C-567. The SGM case concerned the City of
Huntington’s fire and flood fees, whereas the case at bar
concerns the City of Huntington’s Municipal Service Fee.
Secondly, the parties to this action are not the same. This
action is against the Most Reverent Bernard W. Schmitt,
Bishop of the Roman Catholic Diocese of Wheeling-Char-
leston. The previous action was against the St. Joseph
Catholic Church and was handled by Reverend Moore.
Therefore the Court finds that the parties are not the
same. Based upon the foregoing, the Court holds that the
City of Huntington may not assert collateral estoppel in
the case before this Court.
Equal Protection
2. “[T]he constitutional requirement [for equal
protection] is the seasonable attainment of a
rough equality in . . . treatment [of] similarly
situated property owners.” Alleghey-Pit-
tsburgh Coal Co. v. Commission of Webster
County, 488 U.S. 336, 109 S.Ct. 633 (1989).
Further, a statute classifying economic rights
will withstand equal protection rational
basis scrutiny where the classification bears
App. 22
a reasonable relationship to a proper gov-
ernmental purpose and all persons with the
class are treated the same. Gibson v. West
Virginia Department of Highways, 185 W.Va.
214, 406 S.E.2d 440, 445.
The West Virginia Supreme Court in the case of The
City of Huntington v. Bacon, et al., 473 S.E.2d 743 (W.Va.
1996) has already determined that the City of Hunt-
ington’s Municipal Service Fee reasonably serves the pur-
pose for which it was enacted. Id.
The Municipal Service Fee is assessed on all owners
of property within the City of Huntington save that
owned by the federal government or by the City of Hunt-
ington. Specifically, Section 773.03 of the Codified Ordi-
nances of the City of Huntington provides:
“On or after July 1, 1991, there is hereby
imposed upon all users of municipal services a
municipal service fee for each lot or parcel of
land containing any building or structure
owned by each user. The fee shall be imposed at
an annual rate of eighty ($80.00) dollars per lot
plus $0.0575 per square foot of each building or
structure existing on each such lot.”
Further a “user” is defined in Section 773.02 of the
Codified Ordinances of the City of Huntington as fol-
lows:
“For the purposes of this article, “user of munic-
ipal services” and “user” refers to any person,
firm, corporation or governmental entity of any
kind owning any building or structure, whether
residential, commercial, governmental or other-
wise, within the limits of the City which benefits
App. 23
from fire and/or flood protection services pro-
vided by the City.”
The Defendant cites two examples of entities which
do not pay a Municipal Service Fee to the City and,
therefore, contend that they should not be required to
pay the same.
The first entity the defendant refers to is the United
States Federal Government. In the case of United States of
America v. City of Huntington, 999 F.2d 71 (4th Cir. 1993),
cert. denied, __ U.S. ___, 114S. Ct. 1048, 127 L.Ed. 2d 371
(1994), the United States Court of Appeals for the Fourth
Circuit held, “[t}he service fee is a thinly disguised tax,
and, as such, the USPS and GSA are immune from lia-
bility for it.” The reason that the Court held that the
federal government was immune from liability was based
upon the Supremacy Clause of the United States constitu-
tion. The Defendant herein is not entitled to the protec-
tions afforded by the Supremacy Clause nor has the
Defendant's equal protection rights been violated by con-
tinuing to be charged for the same. The City of Hunt-
ington cannot legally collect this fee from a federal entity
based upon this decision. This was not an exemption put
in place by the City to give special treatment to the
federal government, but was placed there by the Fourth
Circuit Court of Appeals.
The second entity the defendant cites to is the City of
Huntington. There is no dispute that the City of Hunt-
ington does not send itself separate and individual bills
for each and every property it owns within the City of
Huntington. On the other hand, the City contributes
additional funds from the City’s general revenue account
App. 24
to cover the cost of providing these services which is not
fully covered by the Municipal Service Fee. For example,
in fiscal year 1996-1997, the City paid an additional
$2,609,308.25 to cover the costs of providing fire and
flood protection to the City of Huntington.
This Court finds that the City does not need to
administratively bill itself for the properties it owns. The
Court finds that the City, in billing itself would unneces-
sarily add to the City’s administrative costs in collecting
the same.
Further, the Court finds that the case of Allegheny
Pittsburgh Coal v. County Commission of Webster County,
109 S.Ct. 633, 638 is not applicable regarding the issues in
the case at bar.
Based upon the foregoing, the Court finds that there
has been no violation of the equal protection clause or of
the Defendant's other constitutional rights. Therefore, in
accordance with Judge O’Hanlon’s order entered July 21,
1997 and other cases that have been presented before this
Court, the Court does hereby find that the Defendant in
this action is liable to the City of Huntington for payment
of its municipal service fees. Further, the Court does
withhold judgment as to the monetary damages of
municipal service fees until some point in the future,
allowing parties time to calculate the same and present
that evidence to the Court.
Penalties
3. On the issue of penalties, the Court does
hereby find that the fact that the City of
Huntington imposes penalty upon penalty
a
te Bee,
App. 25
has a chilling effect upon the litigation of
these issues. Therefore, the Court finds for
purposes of the case now before it that the
penalties shall be computed only upon the
outstanding principal amount of municipal
service fees and not on any penalty that has
previously accrued. It must be noted that the
Court is not ordering that the City of Hunt-
ington’s ordinance be changed by its find-
ings in this case, nor the City’s method of
computing its penalty upon other entities be
modified in accordance therewith.
WHEREFORE, based upon the foregoing, it is hereby
ORDERED, ADJUDGED and DECREED that judgment on
this issue of liability be GRANTED to the City of Hunt-
ington and that the Defendant’s Motion for Summary
Judgment is hereby DENIED.
ENTER THIS 4 DAY OF JUNE, 1998.
/s/ DAVID M. PANCAKE
Honorable David M. Pancake,
Judge
PREPARED FOR ENTRY BY:
/s/ Jendonnae L. Houdyschell
Jendonnae L. Houdyschell, Esquire
City Attorney
The City of Huntington
Post Office Box 1659
Huntington, West Virginia 25717-1659
App. 26
APPROVED FOR ENTRY BY:
/s/ Sandra K. Henson
Sandra K. Henson, Esquire
Lewis, Friedberg, Glasser,
Casey & Rollins, LLP
Post Office Box 1746
Charleston, West Virginia 25326-1746
/s/ Michael A. Woelfel
Michael A. Woelfel, Esquire
Attorney at Law
909 Fifth Avenue
Huntington, West Virginia 25701
———
App. 27
IN THE CIRCUIT COURT OF
CABELL COUNTY, WEST VIRGINIA
THE CITY OF HUNTINGTON,
a West Virginia Municipal
Corporation,
Plaintiff,
v. CIVIL ACTION NO. 97-C-320
(Judge David Pancake)
MOST REVERENT BERNARD W. SCHMITT,
BISHOP OF THE ROMAN CATHOLIC
DIOCESE OF WHEELING-CHARLESTON,
Defendant.
ORDER
CAME ON A PREVIOUS DAY, to-wit: Tuesday, May
19, 1998, the City of Huntington, by its counsel, Jendon-
nae L. Houdyschell, City Attorney, and the Defendant,
Most Reverent Bernard W. Schmitt, Bishop of the Roman
Catholic Diocese of Wheeling-Charleston, by counsel,
Sandra K. Henson and Michael A. Woelfel.
The Court, after review of the Memoranda filed by
the parties and after hearing the arguments of counsel,
does hereby find as follows:
1. With regard to Count I of the Complaint, the
Court does hereby find that the Defendant is
indebted to the City of Huntington in the
amount of Eight Thousand Twenty-Three
Dollars and 35/100 ($8,023.35); prejudgment
interest from April 24, 1997 to the date of the
entry of this Order on the amount of Six
Thousand One Hundred Ninety-Nine Dol-
lars and 87/100 ($6,199.87); post judgment
App. 28
interest on the amount of Eight Thousand
Twenty-Three Dollars and 35/100 ($8,023.35)
in addition to all prejudgment interest
awarded hereon.
2. With regard to Count II of the Complaint,
the Court does hereby find that the Defen-
dant is indebted to the City of Huntington in
the amount of Ten Thousand Seven Hun-
dred Twenty-Eight Dollars and 65/100
($10,728.65); prejudgment interest from
April 24, 1997 to the date of the entry of this
Order on the amount of Eight Thousand
Two Hundred Ninety Dollars and 32/100
($8,290.32) post judgment interest on
the amount of Ten Thousand Seven Hun-
dred Twenty-Eight Dollars and 65/100
($10,728.65) in addition to all prejudgment
interest awarded hereon.
3. The Court further finds that the Defendant
shall bear all costs associated with the filing
of this action.
WHEREFORE, it is hereby ORDERED, ADJUDGED
and DECREED that with regard to Count I of the Com-
plaint, the Court does hereby GRANT judgment in favor
of the City of Huntington and against the Defendant and
does hereby ORDER the Defendant to pay to the City of
Huntington the amount of Eight Thousand Twenty-Three
Dollars and 35/100 ($8,023.35); prejudgment interest from
April 24, 1997 to the date of the entry of this Order on the
amount of Six Thousand One Hundred Ninety-Nine Dol-
lars and 87/100 ($6,199.87), post judgment interest on the
amount of Eight Thousand Twenty-Three Dollars and
35/100 ($8,023.35) in addition to all prejudgment interest
awarded hereon.
App. 29
It is further ORDERED, ADJUDGED and DECREED
that with regard to Count II of the Complaint, the Court
does hereby GRANT judgment in favor of the City of
Huntington and against the Defendant and does hereby
ORDER the Defendant to pay to the City of Huntington
the amount of Ten Thousand Seven Hundred Twenty-
Eight Dollars and 65/100 ($10,728.65); prejudgment inter-
est from April 24, 1997 to the date of the entry of this
Order on the amount of Eight Thousand Two Hundred
Ninety Dollars and 32/100 ($8,290.32); post judgment
interest on the amount of Ten Thousand Seven Hundred
Twenty-Eight Dollars and 65/100 ($10,728.65) in addition
to all prejudgment interest awarded hereon.
It is further ORDERED, ADJUDGED and DECREED
that the Defendant shall bear all costs associated with the
filing of this action.
To all of which the Defendant does hereby object and
except.
ENTER THIS 12 day of MA¥ June, 1998.
/S/ DAVID M. PANCAKE
Honorable
David M. Pancake, Judge
PREPARED FOR ENTRY BY:
/s/ Jendonnae L. Houdyschell
Jendonnae L. Houdyschell, Esquire
City Attorney
The City of Huntington
Post Office Box 1659
Huntington, West Virginia 25717-1659
App. 30
APPROVED FOR ENTRY BY:
/s/ Sandra K. Henson
/s/
Sandra K. Henson, Esquire
Lewis, Friedberg, Glasser,
Casey & Rollins, LLP
Post Office Box 1746
Charleston, West Virginia 25326-1746
Michael A. Woelfel
Michael A. Woelfel, Esquire
Attorney at Law
909 Fifth Avenue
Huntington, West Virginia 25701
App. 31
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
The 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. 32
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,
Defendant 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
oes.
prre
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