Appendix — Grandeotto, Inc. v. City of Clarksburg
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FILED
jn The OFFICE OF THE CLERK
Suprene Court of the United Stales
No.
October Term 1998
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,
Petitioners,
. .
CITY OF CLARKSBURG, a municipal corporation,
Respondent.
ON PETITION FOR WRIT OF CERTIORARI
TO THE SUPREME COURT OF WEST VIRGINIA
Appendix to Petition for Writ of Certiorari
Thomas G. Eddy
Counsel of Record
EDDY & OSTERMAN
Manor Building Penthouse
564 Forbes Avenue
Pittsburgh, PA 15219
(412) 281-5336
Counsel for Petitioners
THE LEX GROUP ¢ 1205 East Main Street @ Suite 2 East ¢ Richmond, VA 23219
(804) 644-4419 @ (800) 856-4419 @ Fax: (804) 644-3256
Bn ae ee ee
TABLE OF CONTENTS
Appendix to the Petition
Opinion,
Supreme Court of Appeals
of West Virginia,
City of Clarksburg v. Grandeotto, Inc., et al.
entered December 15, 1998 ................cccceeees App. |
Order,
Supreme Court of Appeals
of West Virginia,
City of Clarksburg v. Grandeotto, Inc., et al.
Re: Motion to Stay
entered February 18, 1999 .............cccsccescssess App. 19
Order,
Supreme Court of Appeals
of West Virginia,
City of Clarksburg v. Grandeotto, Inc., et al.
Re: Rulings
Omtered Feoruaxry 4, 1999 ......ccccccccscocesssacesesse App. 21
Order,
Supreme Court of Appeals
of West Virginia,
City of Clarksburg v. Grandeotto, Inc., et al.
Re: Joint Motion to Consolidate
Cuber Ocvated 1S, TIPS oso .ccacccccseccsescssccnseoss App. 23
App. i
Order,
Supreme Court of Appeals
of West Virginia,
City of Clarksburg v. Grandeotto, Inc., et al.
Re: Leave to Intervene
entered October 15, 1998 ........cccccscceseeseeeeeees App. 26
Order,
Supreme Court of Apneals
of West Virginia,
City of Clarksburg v. Grandeotto, Inc., et al.
Re: Granting Petition for Appeal
entered May 14, 1998 .............sescseereenreeeees App. 28
Order,
United States Court of Appeals
for the Fourth Circuit,
Fccio, et al. v. City of Clarksburg, et al.
Xe: Petition for Rehearing
entered February 20, 1998 ........cccccsseeseeeees App. 30
Opinion,
United States Court of Appeals
for the Fourth Circuit,
Folio, et al. v. City of Clarksburg, et al.
entered January 26, 1998 ........cccssseereeeeeees App. 33
Memorandum of Decision and Order,
Circuit Court of Harrison County, West Virginia,
City of Clarksburg v. Grandeotto, Inc., et al.
entered July 24, 1997 .........csseccssseercereereness App. 46
App. ii
Memorandum Opinion and Order,
United States District Court,
Northern District of West Virginia,
Folio, et al. v. City of Clarksburg, et al.
entered April 14, 1997............csssssees
Judgment in a Civil Case,
United States District Court,
Northern District of West Virginia,
Folio, et al. v. City of Clarksburg, et al.
entered April 14, 1997.............scssssssseeees
Opinion,
Supreme Court of Appeals of West Virginia,
City of Huntington v. Bacon, et al.
entered Jume 14, 1996 .........cccccccccceceseseees
Opinion,
United States Court of Appeals
for the Fourth Circuit,
US v. City of Huntington
entered June 10, 1993 ...........cccccccccceeeeeees
Order,
Supreme Court of Appeals,
of West Virginia,
City of Clarksburg v. Grandeotto, Inc., et al.
Re: Petition for Rehearing
entered January 28, 1999 ..........cccsecseee
Relevant Portions of
I eaatenaneh
Relevant Portions of
Article VI - Miscellaneous Provisions................
App. ili
at App. 94
Relevant Portions of
Amendment 14... cssesieessccscecssescscc. snidagiimeaiiieks App. 104
Relevant Portions of
UNE Dic cricscidsamesceeeee as ee App. 105
Relevant Portions of
INE FEE sais nine isentcieeshdcsieniiiee wie App. 107
Excerpt of Plaintiff's Answers to
Defendants Second Set of
Interrogatories and Request for
Production of Documents,
City of Clarksburg v. Grandeotto, et al. ............ App. 109
App. iv
IN THE SUPREME COURT OF APPEALS
OF WEST VIRGINIA
September 1998 Term
No, 25143
CITY OF CLARKSBURG,
A MUNICIPAL CORPORATION,
Appellee
Ve
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
AFFIRMED
AND
App. |
No. 25401
THE CITY OF HI INTINGTON,
A WEST VIRGINIA CORPORATION.
Appellee
Vv.
MOST REVEREND BERNARD W. SCHMI rT,
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. 2
No. 25402
WHEELING COLLEGE, INC.,
A WEST VIRGINIA CORPORATION, AND
THE MOST REVEREND BERNARD W. SCHMITT,
BISHOP OF THE DIOCESE OF
WHEELING-CHARLESTON,
Appellants
Vv.
THE CITY OF WHEELING,
A MUNICIPAL CORPORATION,
Appellee
AND
THE CITY OF WHEELING,
A MUNICIPAL CORPORATION,
Appellee
£
THE OHIO COUNTY BOARD OF EDUCATION,
Appellant
Appeal from the Circuit Court of Ohio County
Honorable Ronald E. Wilson, Judge
Civil Action Nos. 95-C-72W & 96-C-11
AFFIRMED
App. 3
Submitted: November 10, 1998
Filed: December 15, 1998
Entered: December 15, 1998
Gregory A. Morgan, Esq.
Young, Morgan & Cann
Clarksburg, West Virginia
Attorney for City of Clarksburg
J. Cecil Jarvis, Esq.
MeNeer, 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
Cliftord 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
App. 4
John Preston Bailey, Esq.
Harry L. Buch, Esq.
Bailey, Riley, Buch & Harman
Wheeling, West Virginia
and
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.
Schrade", 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
App. 5
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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 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).
lt iailliaete
Per Curiam:
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The three cases before us were consolidated for
argument 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 Wheeling-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 University 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
App. 7
consideration.’ That orde was determined by the court to
be a final, appealable order by order entered August 28,
1998
[he first case involves individual landowners who
own property within the City of Clarks burg The City
enacted and amended ordinances imposing fire protection
and waste collection service lees under the authority of
W.Va. Code § 8-13-13 (197])2 Notwithstanding any
charter provisions to the contrary, every municipality which
‘lurnishes any essential oy} special municipal — service.
including, but not limited to. police and fire protection.
es on the streets or otherwise. parks and
recreational facilities, street cleaning, street lizhting, street
tenance and improvement. sewerage and sewage
disposal, and the collection and disposal of garbage, refuse,
Waste, ushes, trash and any othe: similar matter, shall have
prenary power and authority to provide by ordinance for the
installation, continuance, maintenance or improvement of
such service, to make reasonable regulations with respect
eto, and to impose by ordinance upon the users of such
},! to ‘hh 1 _e te
SEVERE PeaSONHAGIC rates, fees and charges to be collected
mer specified in the ordinance: Provided. That any
sewerage and sewage disposal service and any service
i? . r
Went to the collection and disposal of garbage, refuse,
~
.
Waste, ashes, trash and any other similar matter shall be
has . ' 1, * wae Ts. . “ )
SUDTECCT TO ine provi SIONS Of chapt ) ’ tWenty- four . 24-]-]
Q
eq.j, Of this code [his (¢ ‘ode section grants local
Me Court reserved three issues for further consideration and
the amounts owed by the | niversity, the Dioc ese, and the Board
whether a binding « ettlement existed enthen the City, the | niversity
ind Diocese: and whether delinquent fire service fees w ere owed by the
soard prior to this Court's decision in City of Huntington v. Bacon. 196
W.Va. 457 1/3 S] 2d 743 (1996)
W.Va. Code § 8-13-13 (1971) « ites In relevant part
App s
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*
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 nonresidential
unit structures and multiple-family residential structures are
assessed according to square footage; nonresidential tenants
must pay fifty percent of the amount per square foot that
nonresidential owners must pay. Ihe 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 summary
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
I]
In the second case, the City of Huntington brought an
action against the Diocese to collect unpaid muiicipal
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 fee is
assessed as a flat fee on each lot with an additional amount
assessed for each square foot of floor space in cach 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 approximately $6,900,000 per
year, Therefore, the City must pay an additional amount of
approximately $2,700,000 annually 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 7} (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
trom 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, stating 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 judgment 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 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.
United States v. City of Huntington, W Va, 999 F.2d 7} (4th
Cir, 1993), cert. denied, $10 U.S. 1109, 114 8.C1 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. 10
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The third appeal involves two cases which were
consolidated 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 building;
tenants of nonresidential and residential unit structures 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).“ The City instituted a 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
: W.Va. Code § 1 1-3-9 (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;
(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[.}
App. 11
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 Wheeling|.]” Having reserved
certain issues for later consideration, the court entered an
order on August 28, 1998, finding that the prior order of the
court “constitutes a final, appealable Order.” 11 is from this
order the University, Diocese, and Board appeal.
IV,
On appeal, the various appellants offer various
assignments of error. The Grandeottos argue the Clarksbur
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 y
City of Huntington, W.Va. supra, and W.Va. Code § 1 1-3-9
(1998)° exempts them from taxation along with the federal
government. All parties request that we revisit our prior
decision, City of Huntington vy. 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.
'he 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.
ee
W.Va. Const. art. X, § I,
See supra note 4.
App. 12
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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 municipal
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 noi obligated to pay
pursuant to the Supremacy Clause, Article VI, Clause 2 of
the U.S.Constitution. By way of explanation, this Court
stated:
[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:
App. 13
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
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 Wo 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 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, Huntington,
and Wheeling. Accordingly, we affirm the respective
judgments of the Circuit Court of Harrison County, the
Circuit Court of Cabell County, and the Circuit Court of
Ohio County.
Affirmed.
App. 14
is
No. 25143 - City of Clarksburg, a municipal corporation
No. 25401 - The City of Huntington, a West Virginia
ici ion __v. Vv
Catholic Diocese of Wheeling-Charl
No. 25402 - Wheeling College, Inc. a West Virginia
co ti nd t t Rev
W, hmitt, Bisho f_ the Di f
Wheeling-Charleston _v. The City of
Wheeling, a municipal corporation AND The
City of Wheeling, a municipal corporation v.
The Ohio County Board of Education.
Entered: December 15, 1996
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.
See footnote’
First, I note the great importance of the municipal
taxes at issue here. Government performs no more important
service than providing its citizens with fire protection. This
is a very basic and historical government service, and one
1 dissent specifically to this Court's decisions in case numbers
25401 and 25402 involving the Roman Catholic Diocese, schools and
boards of education. | believe there is no reason the appellants in case
number 25143 should not pay the "fee" at issue since, unlike churches
and schools, they are not exempted under W.Va. Code § 11-3-9.
App. 15
that private citizens are unable to undertake for themselves.
In order to provide this service, local governments must staff
fire departments with trained personnel and provide these
personnel with modern firefighting 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 it should be.
However, Article X, § 1 of the Constitution of West
Virginia provides, in part, that "property used for
educational, _ literary, scientific, religious or charitable
purposes . . . 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 §
| 1-3-9 provides, 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;
(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 furnituref.]
This code section derives, at least in part, from the
recognition that those enumerated institutions which are
supported by the public, either through taxation or private
gifts, and that exist for the educational, literary, scientific.
religious, or charitable enrichment of society should fulfil]
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 unambiguous
App. 16
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ae
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 long
now before legitimate "fees" for fire and flood protection are
joined by more questionable "fees" such as recreation fees,
clean air fees, pollution fees, beautification 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.
Maryland, 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 improvements. 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. Regardless of whether the collection of the
money is called a tax or a fee, it has the same effect on the
App. 17
appellants’ finances. Shakespeare wrote, "That which we
call a rose by any other name would smell as sweet. "See
footnote? 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
Huntington, 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 ail the fees involved here. Further,
the Court of Appeals held that the federal government is
immune from paying these exact same fees. Therefore, |
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.
Romeo and Juliet. Act II, Sc. 2, Line 43.
App. 18
STATE OF WEST VIRGINIA
At a Regular Term of the Supreme Court of Appeals
continued and held at Charleston, Kanawha County, on the
18th day of February, 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. Fotio, 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-Cha:leston, Defendant Below,
Appellant
AND
Wheeling Coliege, Inc., West Virginia corporation, and the
Most Reverend Bernard W. Schmitt, Bishop of the Diocese
of Wheeling-Charleston, Plaintiffs Below, Appellants
vs.) No. 25402
App. 19
rhe City of Wheeling, a municipal corporation, Defendant
Below Appellee
AND
rhe City of Wheeling, a municipal corporation, Plaintfl
Below, Appellee
lhe Ohio County Board of Education, Defendant Below,
On a former day, to-wit, February 16, 1999, came the
ippellants, Grandeotto, Inc., a corporation; Bernard J. and
Kathy A. Folio; Mid-City Land Co.; Bernard J. Folio, d/b/a
Highrise Associates; Kathryn Folio and Joseph Folio, by
Eddy & Osterman, and Thomas G. Eddy, and McNeer,
Highlan, Mcmunn & Varner, and J. Cecil Jarvis, then
attorneys, and presented to the Court their motion in writing
for a stay of the Court's mandated pending the filing of a writ
f certiorari with the Supreme Court of the United States
Upon consideration whereof, the Court is of opinion
th her
tO and dom ereby refuse said motion to sta\ the Court's
leet , seal
ndate. Justice Maynard would grant
\pp. 20
Co a a a TAP BI
STATE OF WEST VIRGINIA
At a Regular Term of the Supreme Court of Appeals
continued and held at Charleston, Kanawha County, on the
4th day of February, 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
vs.) No. 25402
App. 21
lhe City of Wheeling, a municipal corporation, Defendant
Below, Appellee
AND
[he City of Wheeling, a municipal corporation, Plaintiff
Below, Appellee
VS
[he Ohio County Board of Education, Defendant Below,
Appellant
rhe Court, having maturely considered the records,
and the oral argument and briefs of counsel thereon, is of
opinion for reasons stated in writing and filed with the record
that there is no error in the rulings of the Circuit Court of
Cabell County, rendered on the 12th day of June, 1998, in
No. 25401; in the rulings of the Circuit Court of Harrison
County, rendered on the 24th day of july, 1997, in No.
25143: or in the rulings of the Circuit Court of Ohio County,
rendered on the 19th day of August, 1998, in No. 25402. It
is therefor considered and ordered by the Court that said
rulings be, and the same hereby are, affirmed; all of which is
ordered to be certified to the Circuit Court of Cabell County,
to the Circuit Court of Harrison County and to the Circuit
Court of Ohio County.
rhe syllabus of points adjudicated, prefixed to the
written opinion Per Curiam, was concurred in by Chief
Justice Davis and Justices Workman and Starcher. Justices
Maynard and McCuskey dissent and reserve the right to file
dissenting opinions.
A True Copy
Attest: Deborah Z. McHenry
Clerk, Supreme Court of Appeals
App. 22
STATE OF WEST VIRGINIA
At a Regular Term of the Supreme Court of Appeals
continued and held at Charleston, Kanawha County, on the
[5th day of October, 1998, 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
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
On a former day, to-wit, October 9, 1998, came the
appellants in No. 25143, Grandeotto, Inc., a corporation;
Bernard J. and Kathy A. Folio; Mid-City Land Company;
Bernard J. Folio, d/b/a Highrise Associates; Kathryn Folio,
and Joseph Folio, by McNeer, Highland, McMunn & Varner,
and J. Cecil Jarvis, and Eddy & Osterman, and Thomas G.
Eddy, their attorneys, and also came the appellants in Nos.
25401 and 25402, 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, by Lewis, Friedberg, Glasser, Casey &
Rollins, G. Nicholas Casey, Jr., Webster J. Arceneaux, III,
and Sandra K. Henson; Thorp, Reed & Armstrong, Clifford
B. Levine, Peter K. Blume, Stuart C. Gaul, Jr., and Cathy M.
Armstrong; Bailey, Riley, Buch & Harman, John Preston
Bailey and Harry L. Buch; Phillips, Gardill, Kaiser &
Altmeyer, and James C. Gardill; and Schrader, Byrd,
Companion & Gurley, and James F. Companion, their
attorneys, and presented to the Court their joint motion in
writing to consolidate the above-captioned proceedings for
the reasons stated therein. Thereafter, on the 14th day of
October, 1998, came the appellee in No. 25143, the City of
Clarksburg, a municipal corporation, by Young, Morgan &
Cann, and Gregory A. Morgan, its attorneys, and presented
App. 24
to the Court its written response in opposition thereto.
Finally, on the same day came the appellee in No. 25401, the
City of Huntington, a municipal corporation, by Jendonnae
L. Houdyschell, its attorney, and the appellee in No. 25402,
the City of Wheeling, a municipal corporation, by Ronald M.
Musser and Rosemary J. Humway-Warmuth, its attorneys,
and presented to the Court their written joint response in
opposition thereto.
Upon consideration whereof, the Court is of opinion
to and doth hereby grant said motion to consolidate. It is
hereby ordered that the above-captioned cases, Nos. 25143,
25401 and 25402 be, and they hereby are, consolidated for
purposes of oral argument, consideration and decision.
Justices Workman and Starcher would refuse. It is further
ordered that these cases be set on the Court's Argument
Docket scheduled for Tuesday, the 10th day of November,
1998.
A True Copy
Attest: Deborah Z. McHenry
Clerk, Supreme Court of Appeals
App. 25
STATE OF WEST VIRGINIA
At a Regular Term of the Supreme Court of Appeals
continued and held at Charleston, Kanawha County, on the
[5th day of October, 1998, the following order was mace
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
On a former day, to-wit, October 9, 1998, came
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, by Lewis, Friedberg, Glasser, Casey & Rollins,
G. Nicholas Casey, Jr., Webster J. Arceneaux, III, and
Sandra K. Henson; Thorp, Reed & Armstrong, Clifford B.
Levine, Peter K. Blume, Stuart C. Gaul, Jr., and Cathy M.
Armstrong; Bailey, Riley, Buch & Harman, John Preston
Bailey and Harry L. Buch; Phillips, Gardill, Kaiser &
Altmeyer, and James C. Gardill; and Schrader, Byrd,
Companion & Gurley, and James F. Companion, their
attorneys, and presented to the Court their motion in writing
for leave to intervene in the above-captioned proceeding for
the purpose of joining in a motion to consolidate the above-
captioned proceeding with The City of Huntington, etc. vs.
Most Reverend Bernard W. Schmitt, et al., No. 25401 and
Wheeling College, Inc., et al. vs. The City of Wheeling/The
City of Wheeling vs. the Ohio County Board of Education,
No. 25402. Thereafter, on the 14th day of October, 1998,
App. 26
came the appellee, the City of Clarksburg, a municipal
corporation, by Young, Morgan & Cann, and Gregory A.
Morgan, its attorneys, and presented to the Court its written
response in opposition thereto. Finally, on the same day
came the appellee in No. 25401, the City of Huntington, a
municipal corporation, by Jendonnae L. Houdyschell, its
attorney, and the appellee in No. 25402, the City of
Wheeling, a municipal corporation, by Ronald M. Musser
and Rosemary J. Humway-Warmuth, its attorneys, and
presented to the Court their written joint response in
opposition thereto.
Upon consideration whereof, the Court is of opinion
to and doth hereby grant said motion to intervene. Justices
Workman and Starcher would refuse.
A True Copy
Attest: Deborah Z. McHenry
Clerk, Supreme Court of Appeals
App. 27
STATE OF WEST VIRGINIA
At a Regular Term of the Supreme Court of Appeals
continued and held at Charleston, Kanawha County, on the
14th day of May, 1998, 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
On a former day, to-wit, December 9. 1997, came the
petitioners, Grandeotto, Inc., a corporation; Bernard J. and
Kathy A. Folio; Mid-City Land Company; Bernard J. Folio,
d/b/a Highrise Associates; Kathryn Folio, and Joseph Folio,
by McNeer, Highland, McMunn & Varner, and J. Cecil
Jarvis, and Eddy & Osterman, and Thomas G. Eddy, their
attorneys, and presented to the Court their petition praying
for an appeal from a judgment of the Circuit Court of
Harrison County, rendered on the 24th day of July, 1997,
with the record accompanying the petition. Thereafter, on
the 22nd day of December, 1997, came the respondent, the
City of Clarksburg, a municipal corporation, by Young,
Morgan & Cann, and Gregory A. Morgan, its attorneys, and
presented to the Court its written response in opposition
thereto.
Upon consideration whereof, the Court is of opinion
to and doth hereby grant said petition for appeal. Chief
Justice Davis would refuse
A True Copy
App. 28
Attest: Rodney Teal
Clerk, Supreme Court of Appeals
App. 29
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
LEWIS F. POWELL, JR.
UNITED STATES COURTHOUSE ANNEX
1100 EAST MAIN STREET, SUITE 50]
RICHMOND, VIRGINIA 23219-3538
TELEPHONE (804) 771-2213
Entered: February 20, 1998
Thomas G. Eddy, Esq.
EDDY & OSTERMAN
Manor Building Penthouse
564 Forbes Avenue
Pittsburgh, PA 15219
J. Cecil Jarvis, Esq.
MCNEER, HIGHLAND & MCMUNN
Empire National Bank Building
P. O. Drawer 2040
Clarksburg, WV 26302
Gregory Alden Morgan, Esq.
YOUNG, MORGAN & CANN
Schroath Building
Suite |
Clarksburg, WV 2630]
Re: 97-1628 Folio v. City of Clarksburg
CA-96-180
Dear Counsel:
Enclosed is a copy of an order filed today in this
case.
App. 30
Yours truly,
Patricia S. Connor
Clerk
/s/ Deborah S. Daniel
Deputy Clerk
Enclosure(s)
cc: Wally Edgell
App. 31
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
FILED: FEBRUARY 20, 1998
ENTERED: FEBRUARY 20, 1998
No. 97-1628
CA-96-180
BERNARD J. FOLIO; MID-CITY LAND COMPANY;
BERNARD J. FOLIO, d/b/a High Rise Associates,
Incorporated; GRANDEOTTO, INCORPORATED;
KATHRYN FOLIO; JOSEPH A. FOLIO
Plaintiffs - Appellants
v,
THE CITY OF CLARKSBURG, WEST VIRGINIA,
a West Virginia municipal corporation, FRANK F ERRARI,
Director of Finance for the City of Clarksburg
Defendants - Appellees
On Petition for Rehearing
with Suggestion for Rehearing In Banc
The appellants’ petition for rehearing and suggestion
for rehearing in banc were submitted to this Court. As no
member of this Court or the panel requested a poll on the
Suggestion for rehearing in banc, and
As the panel considered the peition for rehearing and
is of the opinion that it should be denied.
IT IS ORDERED that the petition for rehearing and
Suggestion for rehearing in banc are denied.
For the Court,
/ ca
CLERK
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 97-1628
BERNARD J. FOLIO; MID-CITY LAND COMPANY:
BERNARD J. FOLIO, d/b/a High Rise Associates,
Incorporated; GRANDEOTTO, INCORPORATED:
KATHRYN FOLIO; JOSEPH A. FOLIO,
Plaintiffs-Appellants,
Ve
THE CITY OF CLARKSBURG, WEST VIRGINIA,
a West Virginia municipal corporation;
FRANK FERRARI, Director of Finance for the
City of Clarksburg,
Defendants-Appellees.
Appeal from the United States District Court for the
Northern District of West Virginia, at Clarksburg. William
M. Kidd, Senior District Judge.
(CA-96-180)
Argued: October 27, 1997
Decided: January 26, 1998
Entered: January 26, 1998
Before LUTTIG, Circuit Judge, CAMPBELL, Senior Circuit
Judge of the United States Court of Appeals for the First
Circuit, sitting by designation, and TRAXLER, United States
District Judge for the District of South Carolina, sitting by
designation.
App. 33
Affirmed by published opinion. Judge Traxler wrote the
opinion, in which Judge Luttig and Senior Judge Campbell
joined.
COUNSEL
ARGUED: Thomas G. Eddy, EDDY & OSTERMAN,
Pittsburgh, Pennsylvania, for Appellants. Gregory Alden
Morgan, YOUNG, MORGAN & CANN, Clarksburg, West
Virginia, for Appellees. ON BRIEF: J. Cecil Jarvis,
MCNEER, HIGHLAND & MCMUNN, Clarksburg, West
Virginia, for Appellants.
OPINION
TRAXLER, District Judge:
Appellants brought this action pursuant to 28
U.S.C.A. § 2201(a) (West 1994) and 42 U.S.C.A. § 1983
(West Supp. 1997) against the City of Clarksburg, West
Virginia (“the City") and Frank Ferrari, Director of Finance
for Clarksburg, seeking a judgment = declaring
unconstitutional an ordinance that imposes a fee for
municipal services and an injunction against the future
collection of the fee. Appellants challenge the ruling of the
district court that the Tax Injunction Act precludes federal
subject matter jurisdiction. See 28 U.S.C.A. § 1341 (West
1993). We affirm.
a
West Virginia law bestows upon a municipality
which furnishes essential municipal services such as police
or fire protection "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
App. 34
users of such service reasonable rates, fees and charges to
be collected in the manner specified in the ordinance." W.
Va. Code § 8-13-13 (1990). Enabled by this statute, the City
enacted an ordinance imposing fees upon property owners
and occupiers within the City for fire protection services. See
Clarksburg, W. Va. Ordinances part 9, ch. 5, §§ 957.01,
957.11 (1983) (as amended). The amount of the fee is
tethered to the classification of each property owner as
“residential” or “non residential," requiring residential
owners to pay a flat fee and non-residential owners to pay a
fee determined by reference to the square footage of their
property. See id, at § 957.11(a).' Appellants own real
property within the City's corporate boundaries and are
classified as nonresidential property owners. See id. at §
957.02(d).
In 1993 and 1994, the City commenced several
actions against appellants, which were later consolidated into
a single lawsuit in the Circuit Court of Harrison County,
West Virginia, to collect unpaid fire protection service fees
previously assessed against appellants. The parties filed
cross-motions for summary judgment. Appellants argued to
the state tribunal that the imposition of the fees constituted
equal protection and due process violations under both the
state and federal constitutions. The state court acknowledged
appellants’ assertion that the fire protection service fee
"violates the Due Process and Equal Protection Clauses of
the United States ... Constitution[ ]," see City of Clarksburg
v. Grandeotto, Inc., et_al., Circuit Court, Harrison County,
West Virginia, No. 93-C-609-2 at 10 (July 24, 1997)
("Memorandum of Decision"), but granted summary
judgment in favor of the City and ordered appellanis to pay
their outstanding fire protection service fees. The West
An exception to this assessment scheme is made for owners of
multiple family residential units who, like nonresidential property
owners, must pay based upon square footage. See Clarksburg, W. Va.
Ordinances part 9, ch. 5 at § 957.1 1(a).
App. 35
Virginia court expressly determined that appellants "failed
to meet their burden of proving that the classifications
selected by the City are arbitrary and unreasonable" or that
“they were treated differently from other property owners in
their same classifications." Id. at 13,
While the state court action was pending, appellants
initiated this action in federal district court against the City.
Appellants sought a declaratory judgment that the ordinance,
as it relates to fire protection services, violates the due
process and equal protection clauses of the Fourteenth
Amendment, and requested injunctive relief against the City
to prevent future collection or assessment of the fees.
Concluding that the Tax Injunction Act barred it "from
enjoining, suspending or restraining the assessment, levy or
collection of the [o]rdinance" or "issufing] a declaratory
judgmcat holding the [o]rdinance unconstitutional," the
district court granted the City's motion to dismiss for lack of
subject matter jurisdiction. J.A. 24. Appellants urged the
district court to find the Tax Injunction Act inapplicable
because West Virginia state law provides no adequate or
certain remedy to challenge the ordinance. The district court
rejected this argument and noted that the only uncertainty
was whether appellants would prevail on the merits of their
claim in state court. See id. at 23. Additionally, the district
court found, contrary to appellants’ insistence, that the fire
service protection fee is a tax subject to the Tax Injunction
Act because the ordinance raised revenue for the public
benefit and was not "in the nature of a privilege fee." See id,
(internal quotation marks omitted).
II.
The Tax Injunction Act provides in its totality
that"[t]he 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.A. § 1341. This statutory
App. 36
provision is a jurisdictional bar that is not subject to waiver,
and the federal courts are duty-bound to investigate the
application of the Tax Injunction Act regardless of whether
the parties raise it as an issue. See Collins Holding Corp. v.
Jasper County, South Carolina, 123 F.3d 797, 799 & n.1 (4th
Cir. 1997). The Tax Injunction Act is undergirded by a
policy of restraint in the federal courts, which, save limited
exceptions, are “under an equitable duty to refrain from
interfering with a State's collection of its revenue" in light of
"the imperative need of a State to administer its own fiscal
operations." Tully v. Griffin, Inc., 429 U.S. 68, 73 (1976).
Essentially, "the Act . . [is] first and foremost a vehicle to
limit drastically federal district court jurisdiction to interfere
with so important a local concern as the collection of taxes."
Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503, 522 (1981). It
is settled that the broad prophylactic terms of the Tax
Injunction Act apply to declaratory as well as injunctive
relief, see California vy. Grace Brethren Church, 457 U.S
393, 411 (1982), and that local taxes fall within the ambit of
the statute, see Collins Holding Corp., 123 F.3d at 799 n.2.
Moreover, the Tax Injunction Act applies to actions where,
as here, a taxpayer seeks injunctive or declaratory relief
under § 1983. See Rosewell, 450 U.S. 503. Only when state
law provides no “plain, speedy and efficient" remedy may a
federal district court order declaratory or injunctive relief
that trenches upon "the assessment, levy or collection” of any
state or local tax. See Grace Brethren Church, 457 U.S. at
411; see also Strescon Indus.. Inc. v. Cohen, 664 F.2d 929,
931 (4th Cir. 1981) (explaining that "[t}he only exception
contemplated by Congress relates to State remedies which
are not plain, speedy, or efficient").
Mindful of these principles, we turn to address
appe-lants’ contention that the district court erroneously
dismissed their action for lack of subject matter jurisdiction,
applying a de novo standard of review. See Tillman v.
Resolution Trust Corp., 37 F.3d 1032, 1034 (4th Cir. 1994).
Appellants advance a two-fold argument. First, they maintain
‘
App. 37
that the "plain, speedy and efficient" exception applies here,
allowing the district court to exercise jurisdiction over their
action for declaratory and injunctive relief against the City.
Second, they contend that the district court was not
prohibited from entertaining their suit because the City's
ordinance does not impose a "tax" within the meaning of the
Tax Injunction Act. For the reasons set forth below, we find
both contentions meritless.
A.
"On its face, the ‘plain, speedy and efficient remedy'
exception appears to require a state-court remedy that meets
certain minimal procedural criteria." Rosewell, 450 U.S. at
$12 (emphasis in original). The essential question is whether
the state remedy "provides the taxpayer with a ‘full hearing
and judicial determination’ at which she may raise any and
all constitutional objections to the tax." Id. at 514. Stated
differently, the taxpayer is entitled to a meaningful
opportunity to assert federal constitutional challenges to the
tax in state court. See McKesson Corp. v. Division of
Alcoholic Beverages & Tobacco, 496 U.S. 18, 39 (1990).
Thus, a real or perceived defect in the substantive remedy
afforded a taxpayer under state law does not clothe the
district court with jurisdiction to hear appellants’ claims. See
Strescon Industries, 664 F.2d at 931 (observing that where
“otherwise adequate [s]tate procedures” exist, "an asserted
substantive defect in the [s]tate remedy, even if found to
exist, is an insufficient basis upon which [federal
jurisdiction may be grounded").
In addition to meeting minimal procedural
safeguards, the state remedy must be certain -- state remedies
that are merely speculative will not divest the federal courts
of jurisdiction to entertain a state taxpayer's claim. See
Franchise Tax Bd. v. Alcan Aluminum, Ltd., 493 U.S. 331,
340 (1990); Hillsborough v. Cromwell , 326 U.S. 620,
625-26 (1946). However, the "certainty" that is required is
App. 38
‘ah aren Se Ris
procedural in nature; the Tax Injunction Act does not
guarantee that the substantive relief sought by the taxpayer
be certain or even likely. See Rosewell, 450 U.S. at 512-15;
see also Cities Serv. Gas Co. v. Oklahoma Tax Comm'n, 656
F.2d 584, 586-87 (10th Cir. 1981) (explaining that "the
likelihood of plaintiff's success in the state court is not a
factor to be considered when determining whether the
jurisdictional prohibition of § 1341 applies"). In examining
whether state law provides a full opportunity for the
presentation of federal challenges, courts must "be faithful to
the congressional intent ‘to limit drastically' federal-court
interference with state tax systems, [and] construe narrowly
the ‘plain, speedy and efficient’ exception to the Tax
Injunction Act." Grace Brethren Church, 457 U.S. at 413.
Appellants argue that West Virginia law does not
afford them a meaningful opportunity to raise their federal
constitutional challenges to the City's ordinance in a state
forum, asserting that every potential avenue of relief under
state law is so tenuous and speculative that they do not have
a plain, speedy and efficient remedy. We are not persuaded.
Appellants have already raised numerous federal
constitutional issues in defending against the City's state
collection action which was pending at the time appellants
initiated this action in federal court. They do not contend that
they were precluded from pursuing these arguments in state
court. In fact, just the opposite is true. Appellants admit that
their "federal constitutional rights were indeed asserted"
before the state tribunal. Brief of Appellants at 4. Rather,
appellants insist that the West Virginia circuit court ignored
these federal issues when it granted summary judgmeiit to
the City -- an assertion that is simply not sustained by the
record. In its written order disposing of the cross-motions for
summary judgment, the state court acknowledged appellants’
federal constitutional arguments:
Defendants have responded [to the City's
lawsuits] by arguing that the fire protection
App. 39
service fee ordinance is invalid and unenforceable
because it was not enacted in accordance with
state law, it violates the Tax Limitation
Amendment of the West Virginia
Constitution, W. Va. Const. art. I, § 10, and it
violates the Due Process and Equal Protection
Clauses of the United States and West
Virginia Constitutions because it is
unreasonable.
See Memorandum of Decision at 10. The state court
then granted summary judgment in favor of the City and
ordered appellants to pay their outstanding fire protection
service fees. In sc doing, the court concluded that appellants
"failed to meet their burden of proving that the classifications
selected by the City are arbitrary and unreasonable" or that
"they were treated differently from other property owners in
their same classifications." Id. at 13. It is clear, contrary to
what appellants would have us believe, that the West
Virginia state court considered appeilants’ federal claims but
simply rejected them. That being the case, the essence of
appellants' argument is substantive, Le., that they are entitled
to a favorable disposition on the merits by the state court.
Unfortunately for appellants, the "plain, speedy and
efficient" requirement of the Tax Injunction Act does not
guarantee appellants success in state court on the substantive
merits of acclaim. See Rosewell, 450 U.S. at 512-15.
Moreover, even had the City not initiated an action
against appellants in state court, West Virginia's version of
the Uniform Declaratory Judgment Act provides appellants
with a "plain, speedy and efficient" remedy that would
preclude federal jurisdiction here. See _W. Va. Code §
55-13-1 (1990). This statute explicitly contemplates that
parties who are aggrieved by a municipal ordinance may
seek a declaratory judgment: "Any person ... whose rights,
status or other legal relations are affected by a statute, [or]
municipal ordinance ...may have determined any question of
App. 40
construction or validity arising under the ... Statute, [or]
ordinance ... and obtain a declaration of rights, status or other
legal relations thereunder," W. Va. Code § 55-13-2. Under
West Virginia law, a declaratory judgment action is clearly
an appropriate vehicle for challenging the constitutionality of
a municipal ordinance, see, e.g., Kisner v. City of Fairmont,
272 S.E.2d 673, 675 (W. Va. 1980); Farley v. Graney , 119
S.E.2d 833, 839 (W. Va. 1960), and there is no procedural
reason why this approach could not be employed to
challenge the ordinance at issue here. Indeed, we are
certainly not alone in concluding that the availability of
declaratory relief under state law constitutes a "plain, speedy
and efficient" remedy for purposes of the Tax Injunction Act
and bars federal jurisdiction. See Tully, 429 U.S. at 74-75:
see also Burris v. City of Little Rock, 941 F.2d 717, 720-21
(8th Cir. 1991) (concluding that an Arkansas declaratory
judgment statute affords an adequate remedy under 28
U.S.C. § 1341); Long Island Lighting Co. v. Town of
Brookhaven, 889 F.2d 428. 431-32 (2d Cir. 1989) (finding
that declaratory relief under New York law Satisfied the
requirements of 28 U.S.C. § 1341 and barred federal
jurisdiction).
Appellants, however, assert that declaratory relief
under West Virginia law is not an adequate state remedy
because a state judge has some discretion in exercising
jurisdiction over a declaratory judgment action. See Hall v.
Hartley, 119 S.E.2d 759 (W. Va. 1961). Further, the
argument goes, in light of unfavorable West Virginia
precedent, no state court will opt to entertain such an action.
rendering a declaratory judgment action an illusory remedy.
Specifically, appellants rely upon City of Huntington vy.
Bacon, 473 S.E.2d 743 (W. Va. 1996), which held in part
that a municipal fire protection fee -- substantially similar to
the one at issue here -- was a fee as opposed to a "tax" under
West Virginia law, and had been properly enacted by the
City of Huntington, see id. at 753-54, 758. Appellants
Suggest that Bacon forecloses the possibility that a state court
would visit the issue of whether the City's fee structure is
constitutional, and that any attempt
to obtain declaratory relief would be futile.
Appellants may be correct that, in light of Bacon or
other West Virginia case law, they would meet with little
success were they to seek a declaration in West Virginia
state court that the ordinance runs afoul of the federal
constitution. But, again, the Tax Injunction Act only guards
against procedural defects, not substantive defects, see
Strescon_ Indus., 664 F.2d at 931, and it does not allow
appellants to invoke the jurisdiction of the federal courts
merely because state precedent is unfriendly, see Carrier
Corp. v. Perez_, 677 F.2d 162, 166 (Ist Cir. 1982). We
conclude that the Uniform Declaratory Judgment Act, as
adopted by West Virginia, see W. Va. Code § 55-13-2, is a
"plain, speedy and efficient" remedy within the meaning of
28 U.S.C.A. § 13412
B.
Having concluded that appellants have a "plain,
speedy and efficient" remedy under West \ + ‘nia law, we
consider whether the fire protection service fee constitutes a
tax for purposes of the Tax Injunction Act. We conclude that
it does.
Appellants contend that the phrase "tax under [s]tate
law,” see 28 U.S.C.A. § 1341, requires this court to look to
In light of our determination that West Virginia affords
appellants a sufficient opportunity to raise their federal challenges to the
ordinance via a declaratory judgment action or in defense to an action to
collect the fees, we need not decide whether the protest procedure that is
set forth in the ordinance, see Clarksburg, W. Va. Ordinances at §
957.16, is a “plain, speedy and efficient" remedy in and of itself, cf.
Tully, 429 U.S. at 74-77 (holding that New York declaratory judgment
procedure provided adequate recourse to challenge the constitutionality
of a state tax statute even though the statute contained an “exclusive”
remedy provision).
App. 42
State law to determine whether the assessment at issue is a
tax within the meaning of the Tax Injunction Act, arguing
that "the label given the assessment by the highest court of a
State is dispositive of whether the assessment is [a tax] for
purposes of the Act." Brief of Appellants at 21. Because the
Bacon court concluded that a similar ordinance imposes a
"fee" under West Virginia law, see Bacon, 473 S.E.2d at
751-54, appellants claim that the ordinance before us is not a
"tax under state law" and falls outside of the Tax Injunction
Act.
We cannot agree. For purposes of the Tax Injunction
Act, it is this court that decides whether the state or local law
is a tax, guided by "federal law ... rather than ... state tax
labels." Robinson Protective Alarm Co. _v. City of
Philadelphia, 581 F.2d 371, 374 (3d Cir. 1978); see Collins
Hoiding Corp., 123 F.3d at 800 n.3 (noting that "[w]hether
the body imposing the assessment labels it as a tax or a fee is
not dispositive because the label is not always consistent
with the true character of the assessment").
Thus, we look to federal law which "make[s] a
general distinction between broader-based taxes that sustain
the essential flow of revenue to state (or local) government
and fees that are connected to some regulatory scheme."
Collins Holding Corp., 123 F.3d at 800. A tax is generally a
revenue-raising measure, imposed by a legislative body, that
allocates revenue "to a general fund, and{is] spent for the
benefit of the entire community." Id. (quoting San Juan
Cellular Tel. Co. v. Public Serv. Comm'n, 967 F.2d 683, 685
(Ist Cir. 1992)). A user fee, by contrast, is a "payment[ ]
given in return for a government-provided benefit" and is
tied in some fashion 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 assessment imposed by a
municipality qualifies as a tax within the meaning of the Tax
Injunction Act. See, e.g.. Burris, 941 F.2d at 720; Indiana
Waste Sys. Inc. v. County of Porter, 787 F. Supp. 859, 865
(N.D. Ind. 1992) (collecting cases).
App. 43
This court has previously considered an essentially
indistinguishable West Virginia municipal ordinance
imposing fire service protection fees, and there we concluded
that it constituted a tax within the meaning of the Tax
Injunction Act because liability for the fee was based upen a
resident's property owner status instead of his use of the city
service. See City of Huntington, 999 F.2d at 73-74. We are
not able to distinguish the fire service protection fee at issue
here from the one the court studied in City of Huntington ,
and, as did that court, we conclude that the fee is a tax for
purposes of the Tax Injunction Act.
Il,
Finally, Appellants contend that the principles of
judicial estoppel prohibit the City from arguing in state court
that the assessment here is a fee, while taking the
contradictory position in federal court that it is a tax.’
Judicial estoppel is an equitable doctrine that exists to
prevent litigants from playing "fast and loose" with the
courts -- to deter improper manipulation of the judiciary.
John S. Clark Co. v. Faggert & Frieden, P.C., 65 F.3d 26,
28-29 (4th Cir. 1995). In order for judicial estoppel to apply,
(1) the party to be estopped must be advancing an assertion
that is inconsistent with a position taken during previous
litigation; (2) the position must be one of fact instead of law;
(3) the prior position must have been accepted by the court in
; We note ironically that appellants maintained inconsistent
positions in federal and state court, essentially making the reverse
arguments of the City. In the state proceeding, appellants argued that the
fire protection service fee was a tax imposed in violation of Article X of
the West Virginia Constitution. J.A. 20F, 20J. Furthermore, in appellants’
complaint in this action, they assert that "[t}he fire service fees assessed
pursuant to the [o]rdinance are in reality taxes ... and are being imposed
.. under the guise and label of ‘fees.’ (J.A. at 8). By contrast, they
contend on appeal that the ordinance imposes a fee which is not subject
to the Tax Injunction Act. Thus, appellants ask us to prohibit the City
from doing precisely what they do so freely. We decline.
App. 44
eee
Sees ny ee
EEO ee
ee EEE a.a._a_ =
the first proceeding; and (4) the party to be estopped must
have acted intentionally, not inadvertently. See Lowery v.
Stovall , 92 F.3d 219, 224 (4th Cir. 1996), cert. denied, 117
S. Ct. 954 (1997).
The City is not advancing before us a factual position
that is inconsistent with any position that it took during the
state court proceedings. Rather, the City is simply urging us
to conclude that the ordinance amounts to a tax under federal
law, while suggesting in state court that state law produces a
different result. The City has not changed the facts from one
forum to the next; it is simply applying a different body of
law. In our view, the City is merely presenting inconsistent
legal theories, a practice that is not proscribed by judicial
estoppel. See Lowery, 92 F.3d at 224; Tenneco Chemicals.
Inc. v. William T. Burnett & Co., 691 F.2d 658. 664-65 (4th
Cir. 1982). Furthermore, given the contrary results reached
by this court in City of Huntington and the Supreme Court of
Appeals of West Virginia in Bacon on the nature of an
essentially identical ordinance, we do not find it at all
dishonest of the City to argue to us that the assessment here
is a tax under federal law, while maintaining in state court
that it is not. Accordingly, we conclude that the application
of judicial estoppel is not appropriate in these circumstances.
IV.
For the foregoing reasons, we affirm the dismissal of
this action by the district court for lack of Subject matter
jurisdiction.
AFFIRMED
App. 45
IN THE CIRCUIT COURT OF
HARRISON COUNTY, WEST VIRGINIA
CITY OF CLARKSBURG,
a municipal corporation,
Plaintiff,
V.
GRANDEOTTO, INC.
a corporation,
BERNARD J. and
KATHY A. FOLIO,
MID-CITY LAND CO.,
BERNARD J. FOLIO,
d/b/a HIGHRISE ASSOCIATES,
KATHRYN FFOLIO,
JOSEPH FOLIO,
Defendants.
CIVIL ACTION NO.
93-C-609-2
CIVIL ACTION NO.
93-C-648-2
CIVIL ACTION NO.
93-C-706-2
CIVIL ACTION NO.
93-C-707-2
CILIV ACTION NO.
94-C-184-2
CIVIL ACTION NO.
94-C-196-2
MEMORANDUM OF DECISION AND ORDER
FINDINGS OF FACT
The Court, after reviewing the pleadings, depositions
answers to interrogatories and admissions on file, pursuant to
App. 46
Rule 56, W.V.R. Civ. P., makes the following Findings of
Fact:
l. Plaintiff, the City of Clarksburg, is a
municipality organized under the laws of West Virginia.
ys In 1983, under the authority of W. Va. Code
§8-13-13, the City of Clarksburg enacted an ordinance
providing for the payment of fire protection service fees by
users of such services. The ordinance was amended on
January 5, 1985, December 21, 1989, and March 5, 1992 and
is currently found in Article 957 of Chapter Five of Part Nine
of the Codified Ordinances of the City of Clarksburg, West
Virginia, 1981, as amended.
i Based on legislative findings that the size and
use of a building are factors that affect the cost of providing
fire protection services, the City devised a classification
scheme for fairly distributing the cost of fire protection
services. Owners of residential unit structures and dual
residential structures were assessed a flat annual rate;
owners of multiple-family residential structures and
nonresidential unit structures were assessed a rate based on
square footage of the building; and tenants of nonresidential
unit structures were assesses a lesser rate based on the square
footage of the structure rented.
4. The Ordinance, Article 957 of the Codified
Ordinance of the City of Clarksburg, West Virginia, as
amended, and its various amendments, were published prior
to their passage as a Class II legal advertisement, in
compliance with W. Va. Code §8-13-13.
-# From its inception and at all times relevant to
these consolidated actions, the primary purpose of the fire
protection service fee has been to defray the expense of
providing fire protection services for the City of Clarksburg.
6. The proceeds generated from the collection of
the fire protection service fee have not been, and are not
earmarked for use other than to defray the cost of fire
protective services for the City of Clarksburg.
App. 47
7. The proceeds from the fire protection service
fee do not exceed the costs of providing the City's fire
protection services.
8. The residential rate for the period from
September 1, 1988 through March 4, 1992 was $40 per year.
The residential rate for the period on and after March 5, 1992
was $60 per year.
9. The rate for owners of nonresidential unit
structures and multiple-family residential structures for the
period from September 1, 1988 through March 4, 1992 was
$0.03 per square foot, with a minimum assessment of $24
per year. The rate for owners of nonresidential and multiple-
family residential structure for the period on and after March
5, 1992 was $0.045 per square foot, with a minimum
assessment of $36 per year.
10.‘ The rate for nonresidential tenants for the
period from September 1, 1988 through March 4, 1992 was
$0.015 per square foot, with a minimum assessment of $24
per year. The rate for nonresidential tenants for the period
on and after March 5, 1992 was $0.0225 per square foot,
with a minimum assessment of $36 per year.
11. By Order entered on the 19” day of
September, 1995, this Court found that the City of
Clarksburg had erroneously assessed the Defendants at an
increased rate for the period of March 1, 1992 through
March 4, 1992, by applying a subsequent rate increase
effective March 5, 1992 against the real property in question.
The assessment against the Defendants have been adjusted
accordingly.
12. During the period from January 1, 1990
through June 30, 1993, Defendant Grandeotto, Inc., was the
owner of the following described nonresidential unit
structures in the City of Clarksburg: one at 353 W. Main
Street, which measured 4,032 square feet; one at 200 W.
Main Street, which measured 6,324 square feet; one at 345
W. Main Street, which measured 10,500 square feet; and
App. 48
one at 210-213-215 W. Main Street, which measured
17,952 square feet.
13. For the period from January 1, 1990 through
February 29, 1992, the City assessed fire protection service
fees against Grandeotto for the following amounts:
353 W. Main Street $262.08
200 W. Main Street $411.06
345 W. Main Street $682.50
210-213-215 W. Main Street $1,166.88
For the period from March 1, 1992, through June 30, 1993,
the City assessed fire protection service fees against
Grandeotto for the following amounts:
353 W. Main Street $241.92
200 W. Main Street $379.52
345 W. Main Street $630.082
210-213-215 W. Main Street $1,077.12
14. Grandeotto has not paid the assessment set
forth in paragraphs 13 and 14. Therefore, it has been
assessed a 10% penalty in the amount of $484.49. pursuant
to Article 957.12(g) of the Codified Ordinances.
15. The assessments against Grandeotto have
been adjusted by $6.26 pursuant to the Court's Order entered
on September 19, 1996.
16. During the period from January 1, 1990
through June 30, 1993, Bernard J. and Kathy A. Folio were
the owners of a residential un:! structure in the City of
Clarksburg at 202 E. Main Street.
17. During the period from September 1, 1988
through June 30, 1993, Bernard J. and Kathy A. Folio were
the owners of a nonresidential unit structure in the City of
Clarksburg at 1 Dane Street, which measured 13,490 square
feet.
App. 49
18. During the period from January 1, 1990
through June 30, 1993, Bernard J. and Kathy A. Folio were
the owners of the following described nonresidential unit
structures in the City of Clarksburg: one at 306 W. Pike
Street, which measured 396 square feet; one at 185
Washington Avenue, which measured 763 square feet; one at
124 S. Second Street, which measured 2,695 square feet.
19. For the period from September 1, 1988
through February 29, 1992, the City assessed Bernard J. and
Kathy A. Folio for fire protection service fees for 1 Dane
Street in the amount of $1,421.16.
20. ‘For the period from January 1, 1990 through
February 29, 1992, the City assessed fire protection service
fees against Bernard J. and Kathy A. Folio for the following
amounts:
202 E. Main Street $86.84
306 W. pike Street $52.00
185 Washington Avenue $52.00
124 S. Second Street $175.24
21. ‘For the period from March 1, 1992 through
June 30, 1993, the City assessed fire protection service fees
against Bernard J. and Kathy A. Folio for the following
amounts:
1 Dane Street $809.44
202 E. Main Street $ 80.00
306 W. Pike Street $ 48.00
185 Washington Avenue $ 48.00
124 S. Second Street $161.76
22. Bernard J. and Kathy A. Folio have not paid
the assessment set forth in paragraphs 20, 21 and 22.
Therefore, they have been assessed a 10% penalty in the
amount of $293.03, pursuant to Article 957.12(g) of the
Codified Ordinances.
App. 50
23. The assessments against Bernard J. and
Kathy A. Folio have been adjusted by $3.50 pursuant to the
Court's Order entered on September 19, 1996.
24. During the period from January 1, 1990
through June 30, 1993, Defendant Mid-City Land Co. was
the owner of the following nonresidential unit structures in
the City of Clarksburg: one at 110-112 S. Third Street,
which measured 3,900 square feet; one at 205 Washington
Avenue, which measured 2,851 square feet; and one at 226
Water Street, which measured 8,535 square feet.
25. For the period from January 1, 1990 through
February 29, 1992, the City assessed fire protection service
fees against Mid-City Land Co. for the following amounts:
110-112 S. Third Street $253.50
205 Washington Avenue $185.38
226 Water Street $554.84
26. For the period from March 1, 1992 through
June 30, 1993, the City assessed fire protection service fees
against Mid-City Land Co. for the following amounts:
110-112 S. Third Street $234.08
205 Washington Avenue $171.04
226 Water Street $512.16
27. Mid-City Land Co. has not paid the
assessments set forth in paragraphs 26 and 27. Therefore. it
has been assessed a 10% penalty in the amount of $190.85.
pursuant to Article 957.12(g) of the Codified Ordinances.
28. The assessments against Mid-City Land Co.
have been adjusted by $2.47 pursuant to the Court's Order
entered September 19, 1996.
29. During the period from January 1, 1990
through June 30, 1993, Defendant Bernard J. Folio, doing
business as Highrise Associates, was the owner of the
following described nonresidential unit structures in the C ity
App. 51
of Clarksburg: one at 128 S. Second Street, which
measured 9,324 square feet; and one at 338 Washington
Avenue, which measured at 6,518 square feet.
30. For the period from January 1, 1990 through
March 4, 1992, the City of Clarksburg assessed fire
protection service fees against Bernard J. Folio, d/b/a
Highrise Associates for the following amounts:
128 S. Second Street $606.06
338 Washington Avenue $423.80
31. For the period from March 5, 1992 through
June 30, 1993, the City of Clarksburg assessed fire
protection service fees against Bernard J. Folio d/b/a
Highrise Associates for the following amounts:
128 S. Second Street $559.50
338 Washington Avenue $391.04
32. Berard J. Folio d/b/a’ Highrise Associates
has not paid the assessments set forth in paragraphs 31 and
32. Therefore, he has been assessed a 10% penalty in the
amount of $179.79, pursuant to Article 957.12(g) of the
Codified Ordinances.
33. The assessments against Bernard J. Folio
d/b/a/ Highrise Associates have been adjusted by $2.55
pursuant to the Court's Order entered September 19, 1996.
34. During the period from December 31, 1989
through January 31, 1994, Defendant Kathryn Folio was the
owner of a residential unit structure in the City of Clarksburg
at 204 E. Main Street.
35. For the period from December 31, 1989
through January 31, 1994, the City of Clarksburg assessed
fire protection service fees against Kathryn Folio in the
amount of $278.84.
36. For the period from February 1, 1990 through
January 31, 1994, the City of Clarksburg assessed solid
App. 52
waste collection fees against Kathryn Folio in the amount of
$340.80.
37. Kathryn Folio has not paid the assessments
set forth in paragraphs 36 and 37. Therefore, she has been
assessed a 10% penalty in the amount of $61.92, pursuant to
Article 957.12(g) of the Codified Ordinances.
38. The assessment against Kathryn Folio has
been adjusted by $0.43 pursuant to the Court's Order entered
on September 19, 1996.
39. During the period from August 1, 199]
through December 31, 1993, Defendant Joseph Folio was the
owner of a residential unit structure in the City of Clarksburg
at 205 E. Main Street.
40. For the period from August 1, 1991 through
December 31, 1993, the City assessed fire protection service
fees against Joseph Folio in the amount of $136.62.
41. Joseph Folio has not paid the assessments set
forth in paragraph 41. Therefore, her has been assessed a
10% penalty in the amount of $ 13.61, pursuant to Article
957.12(g) of the Codified Ordinances.
42. The assessment against Joseph Folio has been
adjusted by $0.43 pursuant to the Court's Order entered
September 19, 1996.
43. The City commenced these consolidated
actions to recover theabove-mentioned unpaid assessments
and accrued penalties from the Defendants.
44. Defendants have responded by arguing that
the fire protection service fee ordinance is invalid and
unenforceable because it was sot enacted in accordance with
State laws, it violates the Tax Limitation Amendment of the
West Virginia Constitution, W. Va. Const. art. I, §10, and it
violates the Due Process and Equal Protection Clauses of the
United States and West Virginia Constitutions because it is
unreasonable.
45. Previously, in October 1984, the City
commenced an action against Grandeotto, Inc., to recover
unpaid fire protection service fees from an earlier billing
period. City of Clarksburg v. Grandeotto, Inc., Civil Action
No. 84-C-698-1 (Harrison County Cir. Ct.).
46. Grandeotto responded to the 1984 action by
arguing that the fire protection service fee was unreasonable
and that it violated W. Va. Const. art. X, §1.
47. In a judgment and order entered on August
12, 1985, Judge McCarthy rejected Grandeotto's defense,
held that the fire protection service fee ordinance did not
violate the Tax Limitation Amendment to the West Virginia
Constitution, held that the fire protection service fee was
reasonable as a matter of fact and law, and ordered that the
City recover of Grandeotto the unpaid fees, plus interest and
the costs of the litigation.
48. _Grandeotto, Inc. thereafter filed a Petition for
Appeal of Judge McCarthy's decision, and the Supreme
Court of Appeals of the State of West Virginia refused to
grant the appeal.
CONCLUSIONS OF LAW
After considering the cross-motions for summary
judgment, the issues in question and the law covering such
matters and as set forth in the Memorandum of Law filed by
counsel for each party, the Court concludes as a matter of
law as follows:
i This Court has jurisdiction of this matter
pursuant to W. Va. Code §8-13-15 and Article 957.13 of the
Codified Ordinances of the City of Clarksburg.
» W. Va. Code §8-13-13 provides plenary
power and authority to cities to assess a reasonable fire
protection service fee.
3. The City of Clarksburg substantially complied
with the requirements of W. Va. Code §8-13-13 in enacting
and amending the Oruinance imposing the City's fire
protection service fee.
App. 54
4. An ordinance passed by the governing body
of a municipality is presumed reasonable and constitutional.
Bookman v. Hampshire County Commission, 193 W. Va. 255,
455 S.E.2d 814, 816 (1995); Town of Burnsville v. Quik-Pic,
Inc., 85 W. Va. 696, 408 S.E.2d 646, 650 (1991).
x Defendants have the burden of overcoming
the presumption of validity. Town of Burnsville v. Quik-Pic,
Inc., 408 S.E. 2d at 650.
6. As a matter of law, Defendants have failed to
meet their burden of proof.
rf As a matter of law, the fire protection service
fee ordinance does not violate the Tax Limitation Amendment,
W. Va. Const. art. 1, §10. City of Huntington v. Bacon, 196 W.
Va. 457, 473 S.E.2d 743, 753-754 (1996).
8. Because Grandeotto, Inc., was a party to City
of Clarksburg v. Grandeotto, Inc., a Civii Action No. 84-C-698-
| (Harrison County Cir. Ct. Aug. 12, 1985), in which the
identical issues of reasonableness of the fire protection service
fee ordinance and validity under W. Va. Const. art. X, §1 were
litigated to completion, Grandeotto, Inc., is estopped from
challenging the ordinance of those grounds. State y. Miller, 194
W. Va. 3, 459 S.E. 2d 114, 120 (1995).
9. The City has a legitimate interest in providing
fire protection services. The City properly determined that both
tenants and property owners were users of fire protection
services.
10.‘ The fire protection service fee imposed under
the Ordinance are based on use of services and not property
ownership.
11. The City properly determined that building
size and use were relevant to the cost of fire protection services.
12. The City properly determined that fire service
protection of nonresidential and multiple-family residential
structures were more costly than the protection of residential
structures based on the frequency and severity of fires within
those classifications.
App. 55
a
13. Defendants have failed to meet their burden
of proving that the classifications selected by the City are
arbitrary and unreasonable.
14. Defendants have failed to meet their burden
of proving that they were treated differently from other property
owners in their same classifications.
15. There is no genuine issue of material fact
remaining to be tried on the issues of the legality of the
ordinance, nor the liability of the Defendants to pay the fire
service protection fees and penalties assessed.
ORDER
NOW, THEREFORE, it is so ORDERED. that
Plaintiff's motion for summary judgment be, and hereby is,
GRANTED and that Defendants motion for summary judgment
be, and hereby is, DENIED; and
IT IS FURTHER ORDERED that after making the
required adjustments and adding all penalties, Plaintiff, the City
of Clarksburg, recover from each of the Defendants the
following adjusted amounts, with interest thereon at the rate of
ten percentum (10%) per annum from the date of this Order, plus
the costs of this action:
Grandeotto, Inc. $5,335.65
Bernard J. and Kathy A. Folio $3,227.47
Mid-City Land Co. $2,101.85
Bernard J. Folio,
d/b/a Highrise Associates $2,178.21
Kathryn Folio $ 681.56
Joseph Folio $ 150.24
To all of which, the Plaintiffs, by their counsel, object and
except.
App. 56
| .
ENTER: July 24, 1997
S/Thomas A. Bedell, Chief Judge
Submitted by:
S/ John L. DePolo
S/ Gregory A. Morgan
S/ J. Miles Morgan
Attorneys for Plaintiffs
App. 57
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF WEST VIRGINIA
BERNARD J. FOLIO, MID-CITY LAND CO.,
BERNARD J. FOLIO d/b/a HIGH RISE ASSOCIATES,
INC.; GRANDEOTTO, INC., KATHRYN V. FOLIO and
JOSEPH A. FOLIO,
Plaintiffs,
Vs.
THE CITY OF CLARKSBURG,
a West Virginia Municipal Corporation, and FRANK
FERRARI, Director of Finance for the City of Clarksburg,
Defendants.
CIVIL ACTION NO. 1:96-CV-180
(JUDGE KIDD)
ENTERED: April 14, 1997
MEMORANDUM OPINION AND ORDER
On October 25, 1996, plaintiffs filed this action for
Declaratory and Injunctive relief under 28 U.S.C. §§ 1331,
2201 and 42 U.S.C. § 1983. Defendants have filed a timely
motion to dismiss pursuant to Rule 12(b)(1), Federal Rules
of Civil Procedure, asserting that the Court lacks jurisdiction.
Said motion, having been fully briefed, is ripe for
disposition.
Plaintiffs are owners of real property within the city
limits of the defendant City of Clarksburg ("City"). Pursuant
to W.Va. Code § 8-'3-13, the City enacted Article 957 of the
Codified Ordinances of the City of Clarksburg ("Ordinance")
which imposes and assesses a fire service fee upon owners
and lessees of real property within the City, including the
plaintiffs.
App. 58
Plaintiffs assert in their complaint that the Ordinance
is unconstitutional and seek to have this Court declare the
same (Count One). Further, plaintiffs seek to have this Court
enjoin the defendants from “any future assessments or
collections" under the Ordinance (Count Two). Defendants
seek dismissal under the Tax Injunction Act, 28 U.S.C. §
1341, asserting that the Court lacks jurisdiction to enjoin
enforcement of the Ordinance, which by necessity would
require a declaration that the Ordinance is unconstitutional.
Title 28, United States Code, Section 1341, provides:
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.
Clearly, the plaintiffs are seeking to "enjoin, suspend or
restrain the assessment, levy or collection" of the Ordinance,
a "tax" promulgated under "State law.” Furthermore,
plaintiffs have a "plain, speedy and efficient remedy" in the
Circuit Court of Harrison County, West Virginia, where they
are currently being sued by the defendants for payments
under the Ordinance. Accordingly, this Court "shall not"
entertain this civil action.
Plaintiffs' argument that no "plain, speedy and
efficient remedy may be had in the courts" of West Virginia
is without merit. The numerous state remedies available to
the plaintiffs are "clear and certain" and will "ensure that the
Opportunity to contest the tax is a meaningful one."
McKesson Corp. v. Florida Alcoholic & Tobacco Div., 496
U.S. 18, 39 (1990). What is not "clear and certain" is that
the plaintiffs will prevail in the state court system. However,
the state does provide a "full hearing and judicial
determination" at which any and all constitutional objections
to the Ordinance may be raised. This process is what is
required by the Tax Injunction Act and the Due Process
App. 59
=x
Clause, not the end result. Rosewell_v. LaSalle National
Bank, 450 U.S. 503, 512-24 (1981). Therefore, the Court
finds that West Virginia "offers in her courts the opportunity
for a plain, speedy and efficient remedy within the meaning
of 28 U.S.C. § 1341." Hutcherson v. Board rvi
of Franklin County, Va., 742 F.2d 142, 145-46 (4th Cir.
1984); Intern. Lotto Fund v. Virginia State Lottery, 20 F.3d
589, 593 (4th Cir. 1994).
Plaintiffs also argue that the Ordinance is not a "tax"
subject to the Tax Injunction Act. In determining whether
the Ordinance comes under the Tax Injunction Act, the Court
looks not to the label put on the Ordinance by the respective
parties, but to the purpose for which the funds are generated
by the Ordinance. Robinson Protective, Etc. v. City of
Philadelphia, 581 F.2d 371, 374-76 (3d Cir. 1978). The
inquiry is "whether the assessment in question is for revenue
raising purposes or merely a regulatory or punitive levy in
the nature of a privilege fee." Wright v. McClain, 835 F.2d
143, 145 (6th Cir. 1987). Here, the revenues are being raised
for the public's benefit, namely to fund the fire department,
an essential public service provided by the City to its
citizens. Clearly, for the purpose of the Tax Injunction Act,
the Ordinance is a "tax." The Court so finds.
Accordingly, the Court holds that the Tax Injunction
Act bars the Court from enjoining, suspending or restraining
the assessment, levy or collection of the Ordinance.
Furthermore, the Court may not issue a declaratory judgment
holding the Ordinance unconstitutional. California v. Grace
Brethren Church, 457 U.S. 393, 408-11 (1982)
Finally, plaintiffs assert that they should be permitted
to proceed with their other claims against the defendants
which may not be technically within the Tax Injunction Act.
However the Court concludes that principles of comity,
which underlie and augment the Tax Injunction Act, bar
these other claims as well. Fair Assessment in Real Estate
Ass'n v. McNary, 454 U.S. 100, 115-16 (1981); Cox Cable
App. 60
Hampton Roads v. City of Norfolk, Va., 739 F.Supp. 1074
(E.D.Va. 1990).
Therefore, defendants’ motion to dismiss pursuant to
Rule 12(b)(1), Federal Rules of Civil Procedure, is hereby
GRANTED and this action is DISMISSED without
prejudice.
It is so ORDERED.
Judgment shall be entered accordingly, and this
action shall be DISMISSED and removed from the docket of
the Court.
The Clerk is directed to transmit certified copies of
this Memorandum Opinion and Order to Counsel of record
herein.
ENTER: April 14, 1997
/s/ William M. Kidd
William M. Kidd
Senior United States District Judge
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF WEST VIRGINIA
BERNARD J. FOLIO, MID-CITY LAND CO.,
BERNARD J. FOLIO, d/b/a HIGH RISE ASSOCIATES,
INC.,: GRANDEOTTO, INC., KATHRYN V. FOLIO, and
JOSEPH A. FOLIO,
V.
THE CITY OF CLARKSBURG,
a West Virginia Municipal Corporation, and FRANK
FERRARI, Director of Finance for the City of Clarksburg.
JUDGMENT IN A CIVIL CASE
CASE NUMBER: 1:96-cv-180
FILED: April 14, 1997
ENTERED: April 14, 1997
Decision by Court. This action came to trial or hearing
before the Court. The issues have been tried or heard and a
decision has been rendered.
IT IS ORDERED AND ADJUDGED that the defendants’
motion to dismiss pursuant to Rule 12(b)(1), of the Federal
Rules of Civil Procedure, is hereby granted and this action is
dismissed without prejudice. This action is stricken from the
docket of this Court.
April 14, 1997 Dr. W YE
Date Clerk
/s/
(By) Deputy Clerk
App. 62
IN THE SUPREME COURT OF APPEALS
OF WEST VIRGINIA
January 1996 Term
No. 23067
THE CITY OF HUNTINGTON,
A WEST VIRGINIA MUNICIPAL CORPORATION,
Plaintiff Below, Appellee
Vv.
JOHN A. BACON AND
CAROLE A. BACON,
Defendants Below, Appellants
Appeal from the Circuit Court of Czbell County
Honorable L. D. Egnor, Judge
Civil Action No. 95-C-11
AFFIRMED
Submitted: January 23, 1996
Filed: June 14, 1996
Entered: June 14, 1996
J. William St. Clair Jendonnae L. Houdyschell
St. Clair & Levine Assistant City Attorney
Huntington, West Virginia Huntington, West Virginia
Attorney for the Appellants Attorney for the Appellee
App. 63
a
(ancien ten
IN THE SUPREME COURT OF APPEALS
OF WEST VIRGINIA
January 1996 Term
No. 23070
THE CITY OF HUNTINGTON,
A WEST VIRGINIA MUNICIPAL CORPORATION,
Plaintiff Below
Vv.
THE CABELL COUNTY BOARD OF EDUCATION,
A WEST VIRGINIA PUBLIC CORPORATION,
Defendant Below
Certified Question from the Circuit Court of Cabell County
Honorable L. D. Egnor, Judge
Civil Action No. 89-C-233
Certified Question Answered
Submitted: January 23, 1996
Filed: June 14, 1996
Entered: June 14, 1996
James Allan Colburn
Baer, Colburn & Morris, L.C.
Huntington, West Virginia
Attorney for the Defendant
App. 64
Jendonnae L. Houdyschell
Assistant City Attorney
Huntington, West Virginia
Attorney for the Plaintiff
Paul T. Boos
Kevin A. Stryker
Office of City Solicitor
Wheeling, West Virginia
Counsel for Amicus Curiae, City of Wheeling
John Preston Bailey
Harry L. Buch
Christopher Paull Riley
Bailey, Riley, Buch & Harman, L.C.
Paul C. Camilletti
Camilletti, Sacco & Pizzuti
Wheeling, West Virginia
Counsel for Amicus Curiae, Wheeling College, Inc.
and Rev. Bernard W. Schmitt
James W. Withrow
Vaughan & Withrow
Charleston, West Virginia
Counsel for Amicus Curiae,
West Virginia Municipal League, Inc.
CHIEF JUSTICE McHUGH delivered the Opinion of the
Court.
App. 65
SYLLABUS BY THE COURT
1. “A circuit court’s entry of summary judgment is
reviewed de novo.” Syllabus point 1, Painter v. Peavy, 192
W. Va. 189, 451 S.E.2d 755 (1994).
2. “Collateral estoppel will bar a claim if four
conditions are met: (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 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." Syl. pt.
1, State v. Miller, W.Va.___, 459 S.E.2d 114 (1995).
3. “Municipalities have no inherent power with
regard to the exercise of the functions of their government.
Such power depends solely upon grants of power by Acts of
Legislature, and the Legislature may at any time modify,
change or withdraw any power so granted by general law in
conformance with the provisions of the Constitution, Article
VI, Section 39%a).” Point 2, Syllabus, State ex rel. Alexander
v. The County Court of Kanawha County, et al., 147 W. Va.
693 [, 130 S.E.2d 200 (1963)]." Syi. pt. 1, State ex rel.
Plymale v. City of Huntington, 147 W. Va. 728, 131 S.E.2d
160 (1963).
4. “The character of a tax is determined not by its
label but by analyzing its operation and effect.” Syl. pt. 2,
City of Fairmont v. Pitrolo Pontiac-Cadillac, 172 W. Va.
$05, 308 S.E.2d 527 (1983).
5. “The essential characteristic of an ad valorem tax,
as its name suggests, is that the tax is levied according to the
value of the property. Also, assessment on a regular basis is
a common characteristic.” Syl. pt. 3, City of Fairmont v.
Pitrolo Pontiac-Cadillac, 172 W. Va. 505, 308 S.E.2d 527
(1983).
6. An ordinance which imposes a municipal service
fee pursuant to W.Va. Code, 8-13-13 [1971] upon the
App. 66
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.
7. "The Board of Education of a school-district is a
corporation created by statute with functions of a public
nature expressly given and no other; and it can exercise no
power not expressly conferred or fairly arising from
necessary implication, and in no other mode than that
prescribed or authorized by the statute.” Syl. pt. 4, Shinn vy.
Board of Education, 39 W. Va. 497, 20 S.E. 604 (1894).
8. 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.
McHugh, Chief Justice:
The two cases before us were consolidated for
argument and opinion. In the first case, the appellants, John
Bacon, Carole Bacon, and other owners of buildings in the
City of Huntington (hereinafter "the Bacons") appeal the
April 25, 1995 order of the Circuit Court of Cabell County
Which granted summary judgment for the City of
Huntington. In the second case, the Circuit Court of Cabell
County certified a question to this Court from a declaratory
judgment action in which the City of Huntington (hereinafter
"City") and the Cabell County Board of Education
(hereinafter "Board of Education") are parties. '
The West Virginia Municipal League, Inc., Wheeling College,
Inc., Rev. Bernard W. Schmitt, and the City of Wheeling submitted
amicus curiae briefs.
App. 67
Both cases involve the resolution of the following
issue: Whether the City 's municipal service fee imposed
upon owners of buildings at an annual rate plus a percentage
based upon the square footage of space contained in each
structure on the lot in order to defray the cost of fire and
flood protection services is a fee or tax. For reasons
explained below, we find the municipal service fee to be a
fee and not a tax.
In order to facilitate an understanding of how the two
cases arose, a history of the municipal service fee in
Huntington needs to be discussed. Furthermore, the
procedural history of each case should be noted.
A.
History of the municipal service fee
In 1990 the City passed an ordinance imposing a
municipal service fee in order to defray the cost of providing
fire and flood protection services:
On or after July 1, 1990, 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 seventy dollars
($70.00) per lot plus $0.0375 per square foot
of floor space contained in each building or
structure existing on each such lot.’
It is not necessary for this Court to discuss in any detail the
difference between the imposition of a flat rate charge upon the owner of
a building and a charge based upon the square footage of a building and a
charge based upon the square footage of a building.
App. 68
Ordinance § 773.03 (footnote added). The term “user” in
the above ordinance is defined in the following manner:
For purposes of this article, ‘user of municipal
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 otherwise, within the limits
of the City which benefits from fire and/or
flood protection services provided by the
City.
Ordinance § 773.02.
In 1991 the City amended ordinance § 773.03 by
increasing the rate to $80.00 per lot and $0.0575 per square
foot. Additionally, that amendment allocated $250,000.00
of the municipal service fee collected between 1991 and
1994 to the improvement of streets and municipal
infrastructure. According to the City, since 1994, the
municipal service fee is no longer being used to improve
streets and municipal infrastructure.
B.
The Bacons
The City filed suit against the Bacons in order to
collect the municipal service fee assessed against them. The
Bacons maintained they were not required to pay the
municipal service fee because the fee was a tax which
violated the Tax Limitation Amendment found in W. Va.
Const. art. X, § 1° The Bacons relied, inter alia, upon
, The Tax Limitation Amendment found in W. Va. Const. art. X,
§ | imposes limits beyond which property may not be subjected to
taxation.
App. 69
United States v. City of Huntington, 999 F.2d 71 (4th Cir.
1993), cert. denied, US. _, 114 S. Ct. 1048, 127 L.
Ed. 2d 371 (1994), which held the municipal service fee was
a tax which an agency of the federal government was not
obligated to pay pursuant to the Supremacy Clause of the
Constitution of the United States.‘ More specifically, the
Bacons argued that the City of Huntington case collaterally
| estops the City from raising the issue of whether the
municipal service fee is a tax or fee in state court.
The circuit court disagreed and concluded that the
municipal service fee was a user fee which the City properly
imposed upon the Bacons pursuant to W. Va. Code, 8-13-13
[1971]. Thus, the circuit court granted the motion for
summary judgment by the City thereby ordering the Bacons
to pay the municipal service fee.
The Bacons have filed the appeal now before us
asserting that the application of the doctrine of collateral
estoppel mandates the circuit court to uphold the Fourth
Circuit's determination that the municipal service fee is a tax
in violation of the Tax Limitation Amendment of our State
; The Supremacy Clause is found in article VI of the Constitution
of the United States, which states, in relevant part:
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, and any thing in the Constitution or
Laws of any State to the Contrary notwithstanding.
The principle that states cannot tax the United States was
derived from McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 4 L. Ed.
579 (1819). More recently it has been explained that "a State may not,
consistent with the Supremacy Clause, U.S. Const., Art. VI, cl. 2 lay a
tax “directly upon the United States" . . . . [T]he Court has never
questioned the propriety of absolute immunity from state taxation.” City
of Huntington, 999 F.2d at 73 (citations omitted).
App. 70
Constitution. In the alternative, the Bacons maintain that
the municipal service fee is a tax pursuant to state law which
also violates the Tax Limitation Amendment. Lastly, the
Bacons assert that even if the municipal service fee is a fee,
it is unreasonably applied to them.
oF
Cabell County Board of Education
On February 16, 1989, the City brought a declaratory
judgment action pursuant to W. Va. Code, 55-13-1 [1941] in
order to seek a declaration of its rights to recover certain
municipal fees assessed against the Board of Education. On
June 22, 1995, the Circuit Court of Cabell County, sua
sponte, issued an order certifying the following question to
this Court: "May the City of Huntington continue to impose
its Municipal Service Fee for Fire and Flood protection upon
the Board of Education of Cabell County, West Virginia in
light of [United States v. City of Huntington, 999 F.2d 71
(4th Cir. 1993)}?"
The circuit court answered the question in the
affirmative, holding that the City of Huntington case from
the Fourth Circuit Court of Appeals did not bar the City from
seeking the municipal service fee from the Board of
Education. Implicitly, the circuit court determined the
municipal service fee was a fee and not a tax. Thus, the
circuit court concluded the fee could be assessed against the
Cabell County Board of Education.
The Board of Education, in the action now before us,
maintains that the municipal service fee is a tax (either
because the collateral estoppel doctrine mandates the circuit
court to apply the Fourth Circuit's holding or because of state
law) which it is exempt from paying pursuant to W. Va.
Code, 11-3-9 [1990]. The Board of Education also
4
W. Va. Code, 11-3-9 [1990] concerns property which is exempt
from taxation. More specifically, W. Va. Code, 1 1-3-9 [1990] states, in
App. 71
q
maintains that even if the municipal service fee is found to
be a fee, there is no legislative enactment obligating it to pay
such a fee.
At the outset, we note that “[a] circuit court’s entry of
summary judgment is reviewed de novo.” Syllabus point 1,
Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).
See also syl. pt. 1, Jones v. Wesbanco Bank Parkersburg,
194 W. Va. 381, 460 S.E.2d 627 (1995) and syllabus point 1,
State_v. Morgan Stanley Co., Inc., 194 W. Va. 163, 459
S.E.2d 906 (1995). Additionally, we have stated that “we
retain some flexibility in determining how and to what extent
. [a certified question from a circuit court to us} will be
answered,” City of Fairmont v. Retail, Wholesale, & Dept.
Store Union, 166 W. Va. 1, 3-4, 283 S.E.2d 589, 590 (1980),
citing West Virginia Water Service Co, v. Cunningham, 143
W. Va. 1, 98 S.E.2d 891 (1957). See also syl. pt. 3, Kincaid
v. Mangum, 189 W. Va. 404, 432 S.E.2d 74 (1993).
Although the Bacons and Board of Education raise
different arguments, there essentially are three common
issues Which must be resolved in these consolidated cases:
(1) Does collateral estoppel apply; (2) Is the municipal
service fee a fee or tax pursuant to state law; and (3) Does
the municipal service fee reasonably serve the purpose for
which it was enacted?
relevant part, that all property which "“belong[s] exclusively to any
county, district, city, village or town in this state, and used for public
purposes ...“ is exempt from taxation. W. Va. Code, 1 1-3-9 [1990] also
exempts from taxation any property “belonging to, or held in trust for . .
free schools, if used for educational, literary or scientific purposes|[.]" See
also W. Va. Const. art. X, § | (Legislature may exempt all property used
for educational purposes from taxation).
App. 72
A.
Collateral Estoppel
As we have previously discussed, the Fourth Circuit
in City of Huntington determined that the municipal service
fee presently at issue to be a tax. The first issue on appeal is
Whether the Fourth Circuit's holding collaterally estops the
City from arguing that the municipal service fee is a fee.
We begin our analysis with a brief discussion of the
collateral estoppel doctrine. The purpose of the collateral
estoppel doctrine is "to foreclose relitigation of issues in a
second suit which have actually been litigated in the earlier
suit even though there may be a difference in the cause of
action between the parties of the first and second suit.” Syl.
pt. 2, in part, Conley v. Spillers, 171 W. Va. 584, 301 S.E.2d
216 (1983). We have outlined four conditions which must
be met before collateral estoppel will bar a claim in syllabus
point ] of State v. Miller, 194 W. Va. 3, 459 S.E.2d 114
(1995):
Collateral estoppel will bar a claim if
four conditions are met: (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 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.
(emphasis added). See also syl. pt. 6, Conley, supra. In the
case before us, the focus is on the first condition of collateral
estoppel. We have stated that an analysis of the first
condition involves not only a determination of whether the
tacts are similar, but also a determination of whether the
App. 73
legal standards and procedures used to assess the facts are
similar. Miller, 194 W. Va. at 10, 459 S.E.2d at 121.
With this in mind we will examine the history of the
City of Huntington case in order to determine whether the
collateral estoppel doctrine is applicable. The case arose in
the Fourth Circuit Court of Appeals after the United States
filed a complaint in the United States District Court seeking
an injunction in order to prohibit the City from imposing the
municipal service fee on the United States Postal Service and
the United States General Services Administration. United
States _v. City of Huntington, 793 F. Supp. 1370 (S. D. W.
Va. 1992). The United States sought a declaration that the
assessed fee was a tax which it was not obligated to pay
pursuant to the Supremacy Clause of the Constitution of the
United States. Id. The district court concluded that the City
of Huntington's municipal service fee was a user fee which
the federal government agencies had to pay.°
The United States Court of Appeals of the Fourth
Circuit reversed the United States District Court's decision.
United States v. City of Huntington, 999 F.2d 71 (4th Cir.
1993). In so ruling, the Court of Appeals noted the
following definitions of fee and tax: "User fees are
payments given in return for a government-provided benefit.
Taxes, on the other hand, are ‘enforced contribution[s] for the
: In arriving at its conclusion, the United States District Court
acknowledged that “[s]tates are without authority to tax the United
States[,]” but noted the United States “must pay reasonable users fees.”
Id. at 1371. When analyzing the specific nature of the exaction imposed
by the City, the district court stated that the "fire and flood fees bear a
reasonable relationship to the consuming public[] [because] [t]hose who
own buildings are the users of the fire and flood protection services." Id.
at 1371. Thus, the district court found the nature of he exaction to be
more like a user fee than a tax. Additionally, the court noted because the
revenue from the municipal service fee was inadequate to cover the costs
of providing those services, the municipal service fee was not an
“enforced contribution to provide for the support of Government.” Id. at
1372 (citation omitted).
App. 74
support of government." Id. at 74 (citations omitted). The
court went on to state "[I}iability for the ‘user fee’ charged by
the City arises from... [the United State's] status as [a]
property owner[] and not from . . . [its] use of a City
service." Id. at 74 (footnote omitted). The Court of Appeals
concluded there was no "relevant difference between the
square-footage method of assessment [which is how the
municipal service fee is assessed] and the ad valorem method
[which is a tax based upon the value of property]." Id. at 74.
The Bacons and the Board of Education maintain that
the issue before the Fourth Circuit regarding whether the
municipal service fee is a tax or fee is exactly the same issue
before the circuit court in each of their respective cases.
Moreover, the Bacons and the Board of Education assert that
the legal principles have not changed since the Fourth Circuit
addressed the issue.
Conversely, the City argues that the Fourth Circuit
decided a different issue. More specifically, the City
maintains that the issue before the Fourth Circuit was
whether the municipal service fee was a tax which the City
could not impose on a federal entity pursuant to the
Supremacy Clause of the Constitution of the United States.
The City maintains that because neither the Bacons nor the
Board of Education is entitled to any immunities under the
Constitution of the United States, the Fourth Circuit's
holding is not applicable to them. We agree.
The Supreme Court of the United States has made
clear that the states are free to chose their own fiscal policies:
"The State is left to cheose its own methods of taxation and
its form and manner of enforcing the payment of the public
revenues, subject, so far as the Federal power is concerned,
to the restricting regulations of the Constitution of the United
States." Kentucky Union Co. v. Kentucky, 219 U.S. 140,
151, 31S. Ct. 171, 176, 55 L. Ed. 137, 154 (1911). See also
Wisconsin v. J. C. Penney Co., 311 U.S. 435, 444, 61 S. Ct.
246, 249-50, 85 L. Ed. 267, 270 (1940) ("A state is free to
pursue its own fiscal policies, unembarrassed by the
App. 75
Constitution, if by the practical operation of a tax the state
has exerted its power in relation to opportunities which it has
given, to protection which it has afforded, to benefits which
it has conferred by the fact of being an orderly, civilized
society.").
The only limitations the Supreme Court of the United
States may impose upon a state's power to determine its own
fiscal policies are those expressed in the Constitution of the
United States. Kentucky Union Co., supra. One such
limitation expressed in the Constitution of the United States
is that the federal government is not subject to any taxation
by a state or political subdivision unless explicitly authorized
by Congress. See _McCulloch_v. Maryland, 17 U.S. (4
Wheat.) 316, 4 L. Ed. 579 (1819) and United States _v.
Harford County, 572 F. Supp. 239 (Dist. Ct. Md. 1983).
Therefore, 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: "Where a federal right is involved, a federal
court is not bound by the characterization given to a state tax
by a state court nor relieved from the duty of considering the
real nature of the tax and its effect on the federal right
asserted." Harford County, 572 F. Supp. at 242 (citing
v. Shaw, 280 U.S. 363, 367-68, 50 S. Ct 121, 122-
23, 74 L. Ed. 478, 482 (1930); United States vy. Allegany,
322 US. 174, 184, 64 S. Ct. 908, 914, 88 L. Ed. 1209, 1217
(1944)).
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. Kentucky Union Co., supra.
Accordingly, the circuit court properly determined
that the Bacons and the Board of Education could not assert
collateral estoppel in the cases before us, as the issue
resolved by the Fourth Circuit in City of Huntington, supra,
App. 76
clearly differs from the issues now pending. See syl. pt. 1,
Miller, supra. Therefore, we must address the issue of
whether the City's municipal service fee is a tax or a fee
pursuant to state law.”
B.
Municinal service fee i .
The City derives all of its power as well as its
existence from the legislature:
‘Municipalities have no inherent
power with regard to the exercise of the
functions of their government. Such power
depends solely upon grants of power by Acts
of the Legislature, and the Legislature may at
any time modify, change or withdraw any
power so granted by general law in
conformance with the provisions of the
Constitution, Article VI, Section 39%a).”*
>
This issue is difficult, and one we address with reservations.
The Bacons and the Board of Education are concerned about the label of
the municipal service fee for different reasons. As previously noted, the
Bacons argue that the municipal service fee is a tax which violates the
Tax Limitation Amendment of our State Constitution. The Board of
Education, on the other hand, argues that the municipal service fee is a
tax which it is not obligated to pay pursuant to W. Va. Code, 11-3-9
(199)]. See n. S, supra. However, in that both arguments involve the
determination of whether the municipal service fee is a tax or fee, we will
focus on that issue.
: W. Va, Const. art. VI, § 39a) provides, in pertinent part, that
[t]he legislature shall provide by general laws for the
incorporation and government of cities, towns and
villages{, and] [sJuch general laws shall restrict the
powers of such cities, towns and villages to borrow
money and contract debts, and shall limit the rate of
App. 77
Point 2, Syllabus, State ex rel. Alexander v. The
County Court of Kanawha County, et al., 147
W. Va. 643 [, 130 S.E.2d 200 (1963)}.
Syi. pt. 1, State ex rel. Plymale v. City of Huntington, 147
W. Va. 728, 131 S.E.2d 160 (1963) (footnote added). See
also syl. pt. 1, Toler v. City of Huntington, 153 W. Va. 313,
168 S.E.2d 551 (1969); syl. pt. 1, Chesapeake & Potomac
Telephone Co. v. City of Morgantown, 144 W. Va. 149, 107
S.E.2d 489 (1959). Cf. syllabus point 1, in relevant part,
Hukle v. City of Huntington, 134 W. Va. 249, 58 S.E.2d 780
(1950) (Because a municipality has no inherent power to
levy taxes, the municipality may only do so pursuant to the
authority granted to it by the legislature). Therefore, the
City only has the authority to impose the fees or taxes which
are authorized by the legislature. Id. See also W. Va. Const.
art. X, § 9° The legislature specifically authorized
municipalities “to impose by ordinance upon the users of
taxes for municipal purposes, in accordance with
section one, article ten of the Constitution of the State
of West Virginia. Under such general laws, the electors
of each municipal corporation, wherein the population
exceeds two thousand, shall have power and authority
to frame, adopt and amend the charter of such
corporation, or to amend an existing charter thereof,
and through its legally constituted authority, may pass
all laws and ordinances relating to its municipal affairs:
Provided, that any such charter or amendment thereto,
and any such law or ordinance so adopted, shall be
invalid and void if inconsistent or in conflict with this
Constitution or the general laws of the State then in
effect, or thereafter, from time to time enacted.
: W. Va. Const. art. X, § 9 states: “The legislature may, by law,
authorize the corporate authorities of cities, towns and villages, for
corporate purposes, to assess and collect taxes; but such taxes shall be
uniform, with respect to persons and property within the jurisdiction of
the authority imposing the same.”
App. 78
[essential or special municipal service, including, but not
limited to, police and fire protection ... and any other
similar matter”] reasonable rates, fees and charges to be
collected in the manner specified in the ordinance|.]” W. Va.
Code, 8-13-13 [1971], in relevant part (emphasis added). It
was pursuant to the authority conferred upon it by W. Va.
Code, 8-13-13 [1971] that the City imposed its municipal
service fee for fire and flood protection services.
Though the above language employed by the
legislature in W. Va. Code, 8-13-13 [1971] suggests tha‘ the
legislature intended the charges imposed on the users of
essential or special municipal services to be user fees rather
than taxes, this Court has held “[t}he character of a tax is
determined not by its label but by analyzing its operation and
effect.” Syl. pt. 2, City of F t_v. Pitrolo Pontiac-
Cadillac, 172 W. Va. 505, 308 S.E.2d 527 (1983), cert.
denied, 466 U.S. 958, 104 S. Ct. 2169, 80 L. Ed. 2d 553
(1984) (emphasis added). See also syl. pt. 2, Solid Waste
Aut vy. Divi | ‘ . Ay! ae
462 S.E.2d 349 (1995) and Hukle, 134 W. Va. at 255, 58
S.E. 2d at 783 (“It is well-nigh universal principle that courts
will determine and classify taxation on the basis of realities,
rather than what the tax is called in the taxing statute or
ordinance.” (citation omitted)). However, “it is difficult to
categorize an assessment as a fee or a tax because the courts
have not adopted universal definitions of these terms.” Solid
Waste Authority, W.Va.at_ , 462 S.E.2d at 353.
Nevertheless, in recognition of the legislature's
constitutional power to determine this State's fiscal policy,
this Court has accorded it and municipalities wide latitude in
how they choose to fund municipal services, such as those
for fire and flood protection. See W. Va. Const. art. VI, §
51; art. X, § 3; and art. X, § 5. The legislature’s power to
determine this State's fiscal policy is limited only by the
Constitution. See also syl. pt. 3, State ex rel, Lambert v
County Comm'n, 192 W. Va. 448, 452 S.E.2d 906 (1994)
App. 79
(This Court must use every reasonable construction of a
legislative enactment in order to sustain its constitutionality).
Thus, the role of this Court is to examine the
“operation and effect” of a charge imposed for a service by a
municipality pursuant to the legislature's authorization in W,
Va. Code, 8-13-13 [1971] to determine whether the charge
violates a constitutional provision, See syl. pt. 2, City of
Fairmont, supra. We are less concerned with the label of the
charge and more concerned with upholding our Constitution.
Though our case law reveals a somewhat convoluted
history in the area of taxes and fees, this Court has generally
operated on the premise that charges for services rendered by
a municipality are user fees and not taxes. See City of
Ch Vv. ion, 158 W. Va. 141, 145, 209
S.E.2d 55, 57 (1974) (the charge for fire protection is a fee
and not a tax); Ci ville v le, 152 W. Va.
465, 164 S.E.2d 430 (1968) (charge of $0.25 per front foot
for street improvement is a fee and not a tax); and Duling
Bros. Co. v. City of Huntington, 120 W. Va. 85, 89-90, 196
S.E. 552, 554-55 (1938) (charges for a flood control program
are not subject to ordinary taxing regulations). This premise
is based on the following definitions of tax and fee: "[T]he
primary purpose of a tax is to obtain revenue for the
government, while the primary purpose of a fee is to cover
the expense of providing a Service or of regulation and
supervision of certain activities." River Falls v. St. Bridget’
Catholic Church, 513 N.W.2d 673, 675 (Wis. Ct. App. 1994)
(citing State v. Jackman, 211 N.W.2d 480, 485 (1973) and
emphasis added). On the other hand, where the “operation
and effect” of a service charge appears to impose a tax, then
this Court examines the service charge more closely. For
example, in Ci tv. Pit Pontiac-Cadillac, 172
W. Va. 505, 308 S.E.2d 527 (1983) this Court found the
police service charge imposed by the City of Fairmont to be
an ad valorem tax which violated the Tax Limitation
Amendment found in W. Va. Const. art. X, § | rather than a
user fee. We determined that the “operation and effect” of
App. 80
the police service charge was the same as the “operation and
effect” of an ad valorem tax because the police service fee,
like an ad valorem tax, was imposed according to the value
of the property. Id. at syl. pts. 1 and 3. See also Hare v. City
of Wheeling, 171 W. Va. 284, 298 S.F.2d 820 (1982) (A
police service charge imposed upon owners of property by
the City of Wheeling based upon the value of property as
determined by the books of the county assessor is, in fact, an
ad valorem tax which violates W. Va. Const. art. X, § 1
rather than a user fee).
Conversely, if the “operation and effect” of the
service charge imposed by a municipality does not give the
appearance of being a tax, and if an ordinance enacted
pursuant to W. Va. Code, 8-13-13 [1971] “reasonably serves
the purpose for which it was enacted,” then this Court will
defer to the municipality's wisdom in imposing the service
charge. Ellison v. City of Parkersburg, 168 W. Va. 468, 472,
284 S.E.2d 903, 906 (1981).
In the case before us, the Bacons and the Board of
Education maintain the City’s municipal service fee is, in
fact, an ad valorem tax because the rate of the fee is based
upon the square footage of space contained in each structure.
In syllabus point 3 of City of Fairmont. supra, we held: “The
essential characteristic of an ad valorem tax, as its name
Suggests, 1s that the tax is levied according to the value of the
property. Also, assessment on a regular basis is a common
characteristic.” Although the City’s municipal service fee is
assessed on a regular basis, it is not based upon the value of
the property. Under the language of the municipal service
fee ordinance, a building worth several million dollars which
has the same square footagt »s a building worth a fraction
of that would be assessed i. -atical municipal service fees.
By imposing a charge based upon a structure's square
footage, the City creatively avoided the results in City of
Fairmont. However, the square footage assessment does not
make the municipal service fee, in fact, an ad valorem tax.
App. 81
The Bacons and the Board of Education also argue
that the municipal service fee falls within the traditional
definition of a property tax: “The consensus of opinion
appears to be that a property tax is a charge on the owner of
property by reason of his ownership alone without regard to
any use that might be made of it,
280 U.S. 124, 136, 50 S. Ct. 46 [, 47], 74 L. Ed.
(1929)|.]°" City of Fairmont, 172 W. Va. at 509, 308 S. : 2
at 531 (quoting Weaver _v. Prince George’s County, 379
A.2d 399, 403-04 (Md. 1977) and citations omitted). The
Bacons and Board of Education focus on the above
definition in isolation which can often be misleading. For
example, in this case the City imposed its municipal service
fee on the primary users of its flood and fire protection
services. These primary users happen to be property owners,
Thus, the City did not impose the municipal service fee on
the owners of property by reason of their ownership alone.
Instead, the fee is imposed upon property owners by reason
of their use of fire and flood protection services. Therefore,
the municipal service fee is not a property tax in this
instance.
Lastly, the Bacons and the Board of Education argue
that because the proceeds from the collection of the
municipal service fee are not used exclusively to pay for fire
and flood protection services, the municipal service fee is a
tax. We agree that the proceeds from the collection of the
municipal service fee must be used exclusively to pay for
fire and flood protection services. As previously noted, in
the past, the City earmarked proceeds from the collection of
the municipal service fee to improve streets and municipal
infrastructure. See Ordinance § 773.03(c) (1991) ("OF the
amount collected under this fee, the amount of $250,000.00
shall be allocated to improve streets and municipal
infrastructure each year for the fiscal years 1991-1992, [992-
1993 and 1993-1994.") The “operation and effect" of using
the proceeds to improve streets and municipal infrastructure
makes the municipal service fee a tax, Currently, however,
App. 82
the municipal service fee is not being used in this manner.
Therefore, as long as the proceeds generated from the
collection of the municipal service fee are not earmarked for
use other than to defray the cost of providing fire and flood
protection services and as long as the proceeds do not exceed
the costs of providing fire and flood protection services, we
find that the “operation and effect" of the municipal service
fee to be that of a fee.
Accordingly, we hold that an ordinance which
imposes a municipal service fee pursuant to W, Va. Code, 8-
13-13 [1971] upon the owners of buildings at an annual rate
plus a percentage based upon the square footage of space
contained in each structure on the lot for the sole purpose of
detraying the cost of fire and flood protection services is a
user fee rather than a tax and therefore, is not in violation of
the Tax Limitation Amendment found in W, Va. Const. art.
X,$ 1.
on
’ serves its ys
Having established the service charge in this case to
be a fee, we must now determine whether the City has
properly used the authority granted to it by the legislature in
W. Va, Code, 8-13-13 [1971]. We have stated that
[t]he standard of review of an ordinance
exercising such power as that granted by W.,
Va, Code, 8-13-13 [1971] is _ the
reasonableness of the ordinance. See Harvey
y. Elkins, 65 W. Va. 305, 64 S.E. 247 (1909).
The determination of whether an ordinance
reasonably serves the purpose for which it
was enacted is initially made by the municipal
authorities. Their passage of the ordinance
App. 83
gives it a presumptive validity and a court should
not hold the ordinance to be invalid unless it
is clear that the ordinance is unreasonable.
Henderson v. Bluefield, 98 W. Va. 640, 127
S.E. 492 (1925).
Ellison v. City of Parkersburg, 168 W. Va. 468, 472, 284
S.E.2d 903, 906 (1981).
The Bacons and the Board of Education make three
arguments in support of their contention that the ordinance
which imposes the municipal service fee for fire and flood
protection services is unreasonable as applied to them. First,
they maintain that the fee is unreasonable because it is not
imposed upon all users of the fire and flood protection
services. For instance, fire departments respond to
automobile accidents, hazardous materials spills, tenant's
fires, and vacant lots which might catch fire, yet the
ordinance does not impose the municipal service fee on any
of these potential users. Thus, the Bacons and the Board of
Education conclude that the municipal service fee for fire
and flood protection does not reasonably burden the users of
the services.
We disagree. We were confronted with a similar
issue in Citizens for Fair Taxation v. Clay County Comm'n,
192 W. Va. 408, 452 S.E.2d 724 (1994), which involves a
statutory provision similar to W. Va. Code, 8-13-13 [1971]
in that it authorized a county commission to impose a special
service fee upon the users of emergency ambulance services.
See W.Va. Code, 7-15-17 [1975]. The Clay County
Commission, pursuant to the authority granted to it by the
legislature in W. Va. Code, 7-15-17 [1975], enacted an
ordinance which imposed an emergency service fee of $25 a
year on each household, regardless of the number of
members in the household, in Clay County.
The appellants in Citizens for Fair Taxation argued
that the imposition of the fee upon each household,
regardless of the number of members in the household, was
App. 84
OE TM TOE tp PIE ERNIE, AGING
inequitable “because a single person living in an apartment
pays the same $25 that the head of a ten-child household
pays while the owner of a hunting camp that is used only
occasionally pays nothing.” Id. at 411, 452 S.E.2d at 727.
In response to the appellants’ argument, this Court stated:
We recognize that perfect equity is
impossible to achieve in any tax'” scheme, but
perfect equity is not the test. The fee enacted
by the Clay County Commission succeeds in
imposing upon and collecting ‘from the users
of emergency ambulance service within the
county a special service fee[.]’ . . . Given the
to
Although this Court uses the term “tax” in the above paragraph,
this Court was not confronted with the issue of whether the special
emergency ambulance service fee was a tax or fee in Citizens for Fair
Taxation, supra. Instead, this Court was confronted with the following
two issues:
(1) the ambulance service fee confounds the equal and
uniform property taxation requirement of W.Va,
Const. art. X, § 1 because the fee is imposed only upon
occupants of residential property and not upon mineral
owners and other owners of raw land; and, (2) the gross
underassessment of natural resource property in Class
Ill imposes an unfair burden on the homeowners in
Class H[.]
Citizens for Fair Taxation, 192 W. Va. at 409-10, 452 S.E.2d at 725-26.
Similarly, in Nine_v. Grant Town, 190 W. Va. 86, 88, 437
S.E.2d 250, 252 (1993) we stated that “the purpose of W. Va. Code, 8-
13-13, is to allow municipalities to enact tax ordinances to defray the
cost of certain municipal services and to impose the tax on it citizens
who are users of such services.” (emphasis added). However, in Nine,
as in Citizens for Fair Taxation, we were not determining whether a
particular charge imposed pursuant to W. Va. Code, 8-13-13 was a tax or
fee. In that we have held in previous cases that certain charges imposed
pursuant to W. Va. Code, 8-13-13 are fees rather than taxes, these two
cases do not imply that every charge imposed pursuant to W. Va. Code,
8-13-13 [1971] or pursuant to a statute allowing a municipality to impose
a charge for services it provides is a tax.
App. 85
administrative difficulties of collecting the fee on
any basis other than a per household basis, we
find that the fee imposed is sufficiently
related to the use of the special service for
which the fee is imposed that the scheme
survives constitutional challenge.
ld. (footnote added). This Court has, thus, recognized that
charges for services provided by municipalities cannot
always be equally achieved upon all users. This Court will
uphold the fee if it is sufficiently related to the use of the
special service for which the fee is imposed.
In the case before us, although the municipal service
fee is not imposed upon all users of the City's fire and flood
protection services, common sense dictates that owners of
property benefit most by these services. Thus, the ordinance
reasonably imposes a service fee which is sufficiently related
to the use of the City's fire and flood protection services."
3 The Bacons rely on that portion of McCoy v. City of
Sistersville, 120 W. Va. 471, 199 S.E. 260 (1938) which held that
imposing a charge for street lighting, garbage collection, sewage disposal
and street cleaning only on property owners to the exclusion of other
users of such services (1.¢. the general public) is not in conformance with
a municipality's statutory authority. More specifically, the Bacons argue
that McCoy stands for the proposition that imposing the City of
Huntington's municipal service fee only on property owners to the
exclusion of other users ts not in conformity with W. Va. Code, 8-13-13
[1971]
First, we point out McCoy was decided under W. Va. Code, 8-4-
20 [1933] which was replaced by W_ Va. Code, 8-13-13 [1971]. The two
Statutes are worded differently in that W_ Va. Code, 8-13-13 [1971] gives
municipalities “plenary power and authority” whereas W_ Va. Code, 8-4-
20 [1933] merely provided that “municipal authority may by proper
ordinance provide for such special service.” See Ellison v. City of
Parkersburg, 168 W. Va. 468, 472 n.1, 284 S.E.2d 903, 906 n. 1 (1981).
Although neither W.Va. Code, 8-4-20 [1933] nor 8-13-13 [1971]
explains what method is to be used to identify who is a “user” of an
essential .~ .cecial service, this Court has given more deference to a
municipalh, . ‘efinition of user under W. Va. Code, 8-13-13 [1971]'s
App. 86
Soieete! ool ekeeneta oY
Second, the Bacons assert that the municipal service
fee for flood protection services is unreasonably imposed
upon them because their buildings are located at an elevation
substantially above the flood wall. Thus, they argue they
should not be required to pay fees for services from which
they will never benefit.
In City of Princeton v. Stamper, W.Va. _, 466
S.E.2d 536 (1995), we addressed a similar issue. In that
case, the City of Princeton enacted an ordinance which
imposed a mandatory service fee on its residents for the
collection and removal of refuse. The appellants argued that
they should not be required to pay the mandatory service fee
because they chose to use the services of a private hauler
rather than the City of Princeton. We rejected this argument
and held that “a mandatory service fee on the collection and
removal of residential refuse regardless of actual use, in
order to prevent a health menace from imperiling an entire
community, is a reasonable and valid exercise of police
powers granted to the City of Princeton under W. Va. Code
8-13-13 (1971). Id. at syllabus point 2. In arriving at our
conclusion we stated that “[a]ll residents, regardless of how
they personally choose to dispose of their refuse, receive a
benefit in the collection and disposal of refuse from other
premises in the community.” Id. at, 466 S.E.2d at 539.
“plenary power and authority” language than we did under W. Va. Code.
8-4-20 [1933]. See syl. pt. 2, City of Princeton v. Stamper, ee fe
, 466 S.E.2d 536 (1995) (Upholding an ordinance which imposes a
“service fee on the collection and removal of residential refuse regardless
of actual use, . is a reasonable and valid exercise of police powers
granted to the City of Princeton under W. Va. Code, 8-13-13 (1971).”).
More relevant to the cases before us, in McCoy this Court held that
imposing a charge on the property owner for fire protection services was
a reasonable exercise of power granted to the City of Sistersville under
the predecessor to W. Va, Code, 8-13-13 [1971], although this Court
warned that basing the charge on the value of the property could violate
the Tax Limitation Amendment of our state constitution. Thus, McCoy
does not support the Bacons’ argument.
App. 87
Similarly, in this case, all property owners benefit
from the flood wall protection services. |The Bacons,
however, disagree and argue that the facts in their case are
more akin to the facts in Duling Bros. Co. v. City of
Huntington, 120 W. Va. 85, 196 S.E. 552 (1938). In Duling
this Court upheld a plan devised by city council which
imposed special assessments on certain properties , but not
others, in order to pay for the construction of the flood wall
in Huntington. Though the city council did not assess
property which had never been flooded, as it did not benefit
from the flood wall protection, it did assess land submerged
by the 1937 flood and land covered in lesser floods.
The Bacons argue that the assessment at issue in
Duling, which was authorized by Acts 1935, c. 68 rather than
the predecessor to W. Va. Code, 8-13-13 [1971], is not
unlike a user fee which can only be charged to a user of the
service who benefits from the service. Though we do not
quarrel with the Bacons' statement that the user of the
service must benefit therefrom, “[iji is not requisite to the
validity of an assessment . . . that the benefits be immediate
or direct or that protection from floods be absolute.
Municipal determination of the lands benefited, unless
arbitrarily exercised, will not be disturbed by the courts.”
Syl. pt. 4, in relevant part, Duling Bros. Co., supra.
Therefore, while the Bacons may not immediately or
directly benefit from the flood protection service fee, the
City has determined that all property owners benefit from
flood protections services which gives the ordinance “a
presumptive validity[. Therefore, this] . . . court should not
hold the ordinance to be invalid unless it is clear that the
ordinance is unreasonable.” Ellison, 168 W. Va at 472, 284
S.E.2d at 906 (citation omitted). We do not find that the
ordinance is unreasonable. Thus, the circuit court did not err
in ordering the Bacons to pay the municipal service fee.
Third, the Board of Education argues that because it
is prohibited from expending money except on those items
which are expressly authorized by statute, the City may not
App. 88
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impose the municipal service fee on it. The Board of
Education relies on Honaker v. Board of Education, 42 W.
Va. 170, 24 S.E. 544 (1896), which held that a board of
education can only exercise power which is expressly
conferred upon it by statute.
Conversely, the City maintains that this Court has
addressed this issue in City of Charleston v. Board of
Education, 158 W. Va. 141, 145-46, 209 S.E.2d 55, 57
(1974) and has concluded that
[i]t would appear from the authorities that the
statute authorizing the City to charge the fee
for fire protection to property owners who are
the users of such service [W. Va. Code, 8-13-
13] gives the City the power and authority to
make such charges against the Board of
Education of Kanawha County because such
fee is not a tax and whether or not it is
collectible from the Board of Education does
not relieve the Board of a moral obligation to
pay for such protection or service.
(emphasis added). In that we agree with the Board of
Education's assertion that a board of education can only
exercise power which is expressly conferred upon it by
statute, and therefore, does not have a "moral obligation’ to
do anything, we now revisit our analysis in City of
Charleston.
In syllabus point 4 of Shinn v. Board of Education,
39 W. Va. 497, 20 S.E. 604 (1894), we held:
The Board of Education of a school-
district is a corporation created by statute with
functions of a public nature expressly given
and no other; and it can exercise no power not
expressly conferred or fairly arising from
necessary implication, and in no other mode
App. 89
than that prescribed or authorized by the statute.
See Bailey v. Truby, 174 W. ie = os ee 2d 302, 309
(1984). See also syl. pt. 1, Ey , 158 W, ve
359, 214 S.E.2d 453 (1975). — of adhd:
Commercial Casualty Insurance Co., 116 W. Va. 503, 506
182 S.E. 87, 89 (1935); Herald v. Board of Education, 65 W.
Va. 765, 65 S.E. 102 (1909); and Honaker, supra. W. Va.
Code, 18-5-1, et seg. sets forth the authority of county boards
of education, More specific to the issue now before us, W,
Va. Code, 18-5-9 [1933] states:
The [county board of education] shall
provide:
(1) By purchase, lease, building or
otherwise, a sufficient number of suitable
schoolhouses and other buildings to meet the
educational needs of its district;
(2) The necessary furniture, fixtures,
apparatus, fuel and all necessary supplies for
the schools;
(3) For the health and cleanliness of
the pupils;
(4) For the repair and good order of
the school grounds, buildings and
equipment,
The board may also provide for
medical and dental clinics.
(emphasis added). Obviously, the above language authorizes
the Board of Education to pay the municipal service fee
imposed by the City. After all, fire and flood protection
services protect the health of pupils and keep school grounds
and buildings in good order, and W, Va. Code, 18-5-9
[1933] clearly mandates the Board of Education to protect
the health of pupils and to keep school grounds and buildings
App. 90
ea ee aes eet ee
in good order. See syl. pt. 1, State v. Warner, 172 W. Va.
502, 308 S.E.2d 142 (1983) ("Where the language of a
statute is clear and without ambiguity the plain meaning is to
be accepted without resorting to the rules of interpretation.")
Moreover, although the legislature specifically stated
that "[a]ll public school property used for school purposes
shall be exempt from execution or other process, and free
from lien or distress for taxes or municipal, county or state
levies[,]" W. Va. Code, 18-5-5 [1933] is silent as to whether
the Board of Education is exempt from paying fees imposed
by the City pursuant to W. Va. Code, 8-13-13 [1971] on the
users of essential or special municipal services. W. Va.
Code, 18-5-5 [1933], in relevant part. We have been unable
to find, nor did the parties supply us with, any statute which
specifically exempts the Board of Education from paying
such fees. A general rule of statutory construction is that
"the exclusion of one subject or thing in a statute is the
inclusion o7 all others." V. inent lt
Co., 157 W. Va. 572, 578, 201 S.E.2d 292, 296 (1973)
(citations omitted).
Therefore, although we disapprove of the analysis
used in City of Charleston, supra, we agree with the result.
Accordingly, we hold 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 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.
We make the above holdings with reservations. This
Court has previously recognized “the financial plight of
municipalities and the continuing need to generate revenue.”
Hare, 171 W. Va. at 290, 298 S.E.2d at 826. However, our
approval today as to the imposition of the fee on the Bacons
and the Board of Education should not open the "floodgates"
App. 91
to creative financing so that a municipality fees a citizen to
death, thereby doing exactly what the Tax Limitation
Amendment in W. Va. Const. art. X, § 1 sought to prevent.
For this reason, we strongly encourage the legislature to
revisit W. Va. Code, 8-13-13 [1971] and attempt to more
explicitly define the authority of municipalities to impose
user fees or charges so as to protect our state citizens. The
legislature should specifically list who, if anyone, is exempt
from paying the user fee. If and when the legislature makes
such a list. it should be mindful of the provisions of the West
Virginia Constitution, such as our equal protection
provision." we cannot read the minds of the legislators and
consistently guess how they would resolve the issues arising
under that Code section. Thus, the legislature is the more
appropriate branch to reconcile the problems which have
arisen under W. Va. Code, 8-13-13 [1971]. However, when
resolving these problems, neither this Court nor the
legislature may ignore the West Virginia Constitution.
Although not an issue now before us, we have grave
concerns as to what the implications of exempting certain
= Because W. Va. Code, 8-13-13 [1971] is not explicit, this Court
has been forced to resolve the issues arising under that Code section on a
case-by-case basis. The results have led to decisions which are not easily
harmonized. The difficulty this Court faces is trying to resolve the issues
arising under W, Va, Code, 8-13-13 (1971] in a consistent manner while
at the same time still properly defer to the legislature. However, we
cannot read the minds of the legislators and consistently guess how they
would resolve the issues arising under that Code section. Thus, the
legislature is the more appropriate branch to reconcile the problems
which have risen under W. Va.Code, 8-13-13 [1971]. However, when
resolving these problems, neither this Court nor the legislature "aay
ignore the West Virginia Constitution. Although not an issue now before
us. we have have grave concerns as to what the implications of
exempting certain persons, governmental entities or other similar
categories of users from paying a charge imposed pursuant to W. Va.
Code, 8-13-13 [1971] will be under the equal protection clause of our
Constitution. Therefore, we strongly encourage the legislature to provide
explicit guidance to municipalities as to how a charge is to be imposed
pursuant to W. Va. Code, 8-13-13 [1971] so as not to run afoul of any of
the provisions of the West Virginia Constitution.
App. 92
: =
eae eM Tee,
nigh aia ec Eee heli Bi ee Oe
persons, governmental entities or other similar categories
of users from paying a charge imposed pursuant to W. Va.
Code, 8-13-13 [1971] will be under the equal protection
clause of our Constitution. Therefore, we strongly
encourage the legislature to provide explicit guidance to
municipalities as to how a charge is to be imposed pursuant
to W, Va. Code, 8-13-13 [1971] so as not to run afoul of any
of the provisions of the West Virginia Constitution.
Moreover, because W. Va, Code, 18-5-9 [1993], which
outlines the authority of county boards of education, is very
broad, we encourage the legislature te revisit that code
section to clarify for the county boards of education what
their obligation is pursuant to that Code section.
In summary, we affirm the circuit court’s entry of
summary judgment for the City in The City of Huntington v.
John A. Bacon. Additionally, we have answered the
certified question in The City of Huntington v. The Cabell
County Board of Education as follows: (1) The Fourth
Circuit Court of Appeals decision in City of Huntington does
not collaterally estop the City from raising the issue of
whether the municipal service fee is a fee or tax; (2) the
municipal service fee is a fee and not a tax; and (3) the
legislature authorized the Board of Education to pay the
municipal service fee at issue in W. Va. Code, 18-5-9
[1993].
No. 23067 - Affirmed.
No. 23070 - Certified Question Answered
App. 93
UNITED STATES of America,
Plaintiff - Appellant,
Vv.
CITY OF HUNTINGTON, WEST VIRGINIA,
Defendant - Appellee.
No. 92-2074
United States Court of Appeals, Fourth Circuit.
Argued: March 2, 1993
Decided: June 10, 1993
Entered: June 10, 1993
Amended by Order Filed July 12, 1993.
United States brought action to enjoin city from
assessing or collecting fee against federal agencies owning
property in city. The United States District Court for the
Southern District of West Virginia, 793, F.Supp. 1370,
Charles H. Haden II, Chief Judge, entered judgment for city,
and United States appealed. The Court of Appeals, K.K.
Hall, Circuit Judge, held that fee charged by city arose from
federal agencies’ status as property owners, not from their
use of city service, so that they were immune from liability
for fee.
Reversed and remanded with instructions.
Edward T. Perelmuter, Tax Div., U.S. Dept. of
Justice, Washington, D.C., argued (James A. Bruton, Acting
Asst. Atty. Gen., Gary R. Allen, David Eng'ish Carmack,
Tax Div., U.S. Dept. of Justice, Washington, D.C.; Michael
W. Carey, U.S. Atty., Charleston, WV, on brief), for
plaintiff-appellant.
App. 94
Frederick G. Staker, Ill, City Atty., City of
Huntington, Huntington, WV, argued, for defendant-
appellee.
Before HALL and LUTTIG, Circuit Judges, and
HOWARD, United States District Judge for the Eastern
District of North Carolina, sitting by designation.
OPINION
K.K. HALL, Circuit Judge:
The United States appeals an order declaring that
federal agencies that own property in the City of Huntington,
West Virginia ("City") are liable for the payment of a
municipal service fee imposed by the City. We hold that the
service fee is a tax from which the United States in immune,
and, accordingly, we reverse.
West Virginia Code §8-13-13 authorizes any city that
"furnishes any essential or special municipal service,
including, but not limited to, police and fire protection ... to
impose upon the users of such service reasonable rates, fees
and charges... ."_ In 1985, the City enacted an ordinance that
imposed a "fire service fee" against owners of residential and
commercial buildings. A Flood protection fee was added in
1°87, and, in 1990, these two fees were combined into a
single "municipal service fee". Infrastructure improvements
were added in 1991 as another purpose for which the fees
could be used. From its inception in 1985, the fee has been
assessed on the basis of square footage of the buildings in the
City.' Civil penalties are available for delinquent accounts.
The square-footage method of assessment was a response to
State constitutional limitations on ad valorem taxation. See Hare v. City
of Wheeling, 171 W. Va. 284, 298 S.E.2d 820 (1982); City of Fairmon:
App. 95
The City assessed the fee against federal agencies
owning property in Huntington, including the General
Services Administration ("GSA") and the United States
Postal Service ("USPS").? These two agencies refused to
pay the fee, and the City assessed penalties and instituted
collection proceedings in state court. The United States then
filed a complaint in federal court asking that the City be
enjoined f:om assessing or trying to collect the tax against
the GSA and USPS.’ The federal agencies also requested
that the court declare that they were immune from that fee.
On cross-motions for summary judgment, the district
court ruled that GSA and USPS must pay the fees, but that
they were not liable for penalties or interest, 793 F.Supp.
1370. The United States appeals; the City does not cross-
appeal the injunction against the collection of penalties and
interest.
I]
[1] The general principle that states cannot tax
the United States derives from Chief Justice Marshall's
opinion in McCulloch vy. Maryland, 17 U.S. (4 Wheat.) 316,
4 L.Ed. 579 (1819). Although the immunity of the federal
government and its instrumentalities has been the source of
v. Pitrolo Pontiac-Cadillac Co., 172 W. Va. 505, 308 S.E.2d 527 (1983),
cert. Denied, 466 U.S. 958, 104 S. Ct. 2169, 80 L.Ed.2d 553 (1984).
: Since 1985, §773.04(c) of the City code has provided as
follows: “Governmental Buildings and Structures. The City hereby
authorized to negotiate with the County, State and Federal Governments
in order to fix an agreement with them so that the City may provide fire
protection service to buildings and structures owned by _ these
governments and located within the City." The record does not disclose
whether any attempt to negotiate with the agencies was ever undertaken.
: There are other federal agencies in the City that own property,
but the order mentions only GSA and USPS. According to the
appellant's brief, these other federal agencies are not parties to this
litigation. Appellant's Brief at 10, n. 14.
App. 96
often conflicting decisions, "[t]he one constant ... is simple
enough to express: a State may not, consistent with the
Supremacy Clause, U.S. Coast., Art. VI, cl. 2, lay a tax
‘directly upon the United States’... . [T]he Court has never
questioned the propriety of absolute immunity from state
taxation." United States v. New Mexico, 455 U.S. 720, 733,
102 S.Ct. 1373, 1382, 71 L.Ed.2d 580 (1982) (quoting Mayo
v. United States, 319 U.S. 441, 447, 63 S.Ct. 1137, 1140, 87
L.Ed. 1504 (1943)). Jf the service fee is a tax, then immunity
is clear.
[2] Although the Supreme Court has never
established a specific standard for determining when a
particular assessment is a tax, the Court has consistently
adhered to the general rule that what must be considered is
"the real nature of the tax and its effect upon the federal right
asserted." United States v. Allegheny County, 322 U.S. 174,
184, 64 S.Ct. 908, 914, 88 L.Ed. 1209 (1944) (quoting
Carpenter v. Shaw, 280 U.S. 363, 367-68. 50 S.Ct. 121, 123,
74 L.Ed. 478 (1930)). The proper analysis to arrive at the
real nature of the assessment is to examine "all the facts and
circumstances ... and assess them on the basis of economic
realities ... .". United States v. City of Columbia, Mo., 914
F.2d 151, 154 (8" Cir. 1990).4 Under this analysis, we
conclude that the service fee imposed by the City is a tax in
the most classic sense of the term.*
: For the purpose of determining claim priority in the context of
bankruptcy, the courts have established the following elements of a tax:
"(a) An involuntary pecuniary burden, regardless of name, laid upon
individuals or property; (b) Imposed by, or under authority of the
legislature; (c) for public purposes, including the purpose of defraying
expenses of government of undertaking authorized by it; and (d) Under
police or taxing power of the state." /n Re Lorber Industries, 675 F.2d
1062 (9th Cir. 1982). The “user fee" at issue in the instant case clearly
qualifies as a tax under this definition.
. The district court reached its result by three different tests,
including the one we have chosen. The first test asked whether the fee is
an enforced contribution to provide for the support of government. See
United States v. Maryland, 471 F.Supp. 1030, 1036 (D.Md. 1979). It
App. 97
[3] The United States must pay reasonable user
fees. For instance, charges for services from city-owned
utilities are clearly fees for which federal government would
be liable to the same extent as any other customer. See
United States v. Harford Co., Md., 572 F.Supp. 239, 241
(D.Md. 1983) ("The federal government has ... recognized
its obligation to pay state or county charges based on the
quantum of water or sewer services rendered.") (emphasis in
original). But not every assessment tied to state-provided
benefit is a user fee.
Fire and flood protection and street maintenance are
core government services. See Mullen Benev. Corp. Vv.
United States, 290 U.S. 89, 54 S.Ct. 38, 78 L.Ed. 192 (1933)
(United States immune from liability for "taxes in the nature
of reassessments for sewers and sidewalks."); see also
Federal Reserve Bank v. Metro Center Improvement District
#1. 657 F.2d 183 (8 Cir. 1981), aff'd, 455 U.S. 995, 102
S.Ct. 1625. 71 L.Ed.2d 857 (1982) (federal immunity from
taxation includes immunity from special assessment on real
estate owned by federal instrumentality); United State v.
Harford Co., Md., 572 F.Supp. 239 (D.Md. 1983) (front-foot
assessment for the financing of county water and sewer
construction projects are taxes from which the federal
government was immune). Under the theory advanced by
the City, virtually all of what now are considered "taxes"
begs the question to conclude, as did the district court, that the service fee
is not a tax because it is intended to recoup funds expended for fire and
flood protection.
The third test derives from cases dealing with federal taxation of
state governments. See United States v. Maine, 524 F.Supp. 1056 (D.Me
1981) (applying a 3-part test: (1) is the charge imposed in a
nondiscriminatory manner; (2) is the charge a fair approximation of the
benefits received: and (3) is the charge structured to produce revenues
that will not exceed the total costs to the government of the benefits to be
supplied). Inasmuch as “[t}he states’ immunity from federal taxation is
more limited than the federal government's immunity from state taxation,
and is base on a different constitutional source," (United States v. City of
Columbia, Mo., 914 F.2d 151, 153-54 (8" Cir. 1990)), we are of the
opinion that the United States v. Maine test is inapplicable here.
App. 98
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could be transmuted into "user fees" by the simple
expedient of dividing what are generally accepted as taxes
into constituent parts, e.g. a "police fee."
[4] User fees are payments given in return for as
government-provided benefit. Taxes, on the other hand, are
"enforced contribution[s] for the support of government."
United States v. La Franca, 282 U.S. 568, 572, 51 S.Ct. 278,
280, 75 L.Ed. 551 (1931). Liability for the “user fee"
charged by the City arises from GSA's and USPS's status as
property owners and not from their use of a City service.”
See Michelin Tire Corp. v. Wages, 423 U.S. 276, 287, 96
S.Ct. 535, 541, 46 L.Ed.2d 495 (1976) ("[Ad valorem]
property taxes are taxes by which a State apportions the cost
of such services as police and fire protection among the
beneficiaries according to their respective wealth ...").
We are unable to discern any relevant difference
between the square-footage method of assessment and the ad
valorem method. The service fee is a thinly disguised tax,
and, as such, the USPS and GSA are immune from liability
for it.
We reverse the judgment of the district court, and we
remand with instructions to enter judgment for the United
States.
REVERSED AND REMANDED WITH
INSTRUCTIONS.
: indeed, the federal government has waived immunity to extent
that it actually receives fire protection services. The City may file a
claim against the United States for reimbursement of direct costs incurred
putting out a fire on federally-owned property. See 15 US.. §2210(a).
App. 99
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
vs.) No. 25402
App. 100
The City of Wheeling, a municipal corporation, Defendant
Below,
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