Elbow River Marketing Limited Partnership v. Barnett et al

Filing 27

MEMORANDUM OPINION. Signed by Magistrate Judge Staci G Cornelius on 8/27/15. (MRR )

FILED
2015 Aug-27 AM 10:03
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
ELBOW RIVER MARKETING
LIMITED PARTNERSHIP,
Plaintiff,
v.
CITY OF BIRMINGHAM, et al.,
Defendants.

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Case No.: 2:15-cv-00025-SGC

MEMORANDUM OPINION
Presently pending is the motion to remand this matter to state court filed by
plaintiff, Elbow River Marketing Limited Partnership. (Doc. 6). Defendants,
Thomas Barnett and the City of Birmingham, have responded (Docs. 16-17) and
Elbow River has replied (Doc. 18). The parties have consented to magistrate judge
jurisdiction pursuant to 28 U.S.C. § 636(c). (Doc. 14). For the reasons that follow,
the motion to remand is due to be granted.
I.

BACKGROUND
This matter concerns Defendants' assessment of business license taxes,

interest, and penalties against Elbow River.

Elbow River, which trades and

facilitates the interstate and international delivery of petroleum products, is a
Canadian limited partnership commercially domiciled in Alberta, Canada. (Doc. 1
at 9). Based on Elbow River's sale of products which were delivered by common

carrier to a terminal located in Birmingham from 2008 through 2011, the City
concluded Elbow River should have been assessed business license taxes as a
wholesaler and/or retailer. (Id. at 10-13). On September 11, 2013, the City entered
a "Notice of Final Assessment of License Tax Interest and Penalty Charges"
("Final Assessment") against Elbow River in the amount of $140,331.96. (Id. at
13, 38). Elbow River appealed the Final Assessment to the City's Administrative
Hearing Officer, pursuant to the procedure established by local ordinance. (Id. at
13). A hearing was held, and on November 12, 2014, the Administrative Hearing
Officer notified Elbow River that the Final Assessment remained in effect. (Id.).
On December 11, 2014, Elbow River appealed the Final Assessment by
filing a "Notice of Appeal and Complaint" in the Circuit Court of Jefferson
County, pursuant to ALA. CODE § 11-51-191(f). (Doc. 1 at 9-28). In order to
perfect its appeal, Elbow River first paid the amount due under the Final
Assessment. (Id. at 13, 37, 39).

The appeal asserts six counts, challenging the

validity of the Final Assessment on a variety of grounds under federal, state, and
local law and seeking: (1) withdrawal of the Final Assessment; (2) alternatively,
revision of the Final Assessment; and (3) waiver of all penalties included in the
Final Assessment. (Id. at 14-28). On January 7, 2015, Defendants removed to this
court on the basis of federal question and diversity jurisdiction. (Id. at 2-3).

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II.

DISCUSSION

While Elbow River asserts a number of arguments in favor of remand, the
court need only address one: the impact of the Tax Injunction Act. Under the Tax
Injunction Act, "[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. § 1341. While
the plain language of the statute applies to taxes levied under State law, it applies
equally to local taxes. See Hibbs v. Winn, 542 U.S. 88, 100 n.1 (2004). The Tax
Injunction Act precludes federal jurisdiction where "(1) the relief requested by the
plaintiff will 'enjoin, suspend, or restrain' a state tax assessment and (2) the state
affords the plaintiff a 'plain, speedy and efficient remedy.'" Amos v. Glynn County
Bd. of Tax Assessors, 347 F.3d 1249, 1255 (11th Cir. 2003) (quoting Williams v.
City of Dothan, 745 F.2d 1406, 1411 (11th Cir. 1984)), abrogation on other
grounds recognized by Nicholson v. Shafe, 558 F.3d 1266, 1270 (11th Cir. 2009).
Here, Defendants do not dispute that Alabama law provides Elbow River a
"plain, speedy and efficient remedy." Amos, 347 F.3d at 1255; (see Doc. 9 at 4-5;
Doc. 17). Under Alabama law:
Either the taxpayer or the taxing jurisdiction may appeal to the circuit
court from a final order issued by the administrative hearing officer by
filing a notice of appeal with the administrative hearing officer and
with the circuit court of the county having jurisdiction over the
municipality which issued, or on whose behalf the final assessment
was issued, within 30 days from the date of entry of the final order.

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ALA. CODE §11-51-191(f).

A State statutory scheme which provides a "full

hearing and judicial determination at which [a taxpayer] may raise any and all
constitutional objections to the tax," constitutes a "plain, speedy, and efficient"
remedy. Amos, 347 F.3d at 1255. The Alabama law under which Elbow River
appealed provides such relief. See Whitlow v. Underwood, No. 10-966, 2011 WL
671577, *3 (M.D. Ala. Feb. 7, 2011) (analyzing parallel statutory procedure for
appealing final assessments by the Alabama Department of Revenue).
However, Defendants contend Elbow River's appeal does not seek to enjoin,
suspend, or restrain the City's assessment, levy, or collection of taxes. Specifically,
Defendants argue the Tax Injunction Act only precludes federal jurisdiction where
plaintiffs seek anticipatory relief. (Doc. 17 at 5) (quoting Jefferson Cty. v. Acker,
527 U.S. 423, 435 (1999)). Because Elbow River paid the amount due under the
Final Assessment, Defendants posit the Tax Injunction Act does not bar federal
jurisdiction over this matter. (Doc. 17 at 5).
As an initial matter, the Alabama law under which Elbow River appealed the
Final Assessment requires a taxpayer to pay the assessment in full prior to
appealing. ALA. CODE § 11-51-191(g)(1). The Eleventh Circuit has noted that
taxpayers who contest assessments must follow the applicable State law
procedures.

Osceola v. Fla. Dep't of Rev., 893 F.2d 1231, 1233 (11th Cir.

1990)(under the Tax Injunction Act "a taxpayer must follow required state

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procedure and is generally deprived access to federal courts to obtain
determination of federal issues"). Next, the Tax Injunction Act is not limited to
requests for prospective injunctive relief. "The [Tax Injunction] Act has also been
applied to actions for damages, including suits for the refund of tax assessments
made by a state." Id. (citing Rosewell v. LaSalle Nat. Bank, 450 U.S. 503 (1981);
Fair Assessment in Real Estate Ass'n. Inc. v. McNalry, 454 U.S. 100 (1981); Bland
v. McHann, 463 F.2d 21 (5th Cir.1972); The Assiniboine & Sioux Tribes v.
Montana, 568 F. Supp. 269 (D. Mont. 1983)). Accordingly, Defendants' argument
that the Tax Injunction Act does not preclude federal jurisdiction over this matter
fails.
III.

CONCLUSION

For the foregoing reasons, federal subject matter jurisdiction over this matter
is precluded by the Tax Injunction Act.1 Accordingly, Elbow River's Motion to
Remand (Doc. 6) is GRANTED. This matter will be remanded to the Circuit
Court of Jefferson County by separate order.
DONE this 27th day of August, 2015.

______________________________
STACI G. CORNELIUS
U.S. MAGISTRATE JUDGE
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In light of this conclusion, the court will not rule on Elbow River's pending motion to amend
the complaint. (Doc. 24).
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