Ponte v. McLachlan et al
Filing
65
Memorandum and Order Granting Defendant Washtenaw County Treasurer's 44 Motion to Dismiss and Granting Defendants Township's, McLachlan's, Albert's, Grewal's, Israel's, Scribner's, Hunt's, Krone's, Lotfian's and Yi's 45 Motion to Dismiss and Denying Plaintiff's 46 Motion for Leave to File a Third Amended Complaint and Denying Plaintiff's 62 Motion to Strike. Signed by District Judge Avern Cohn. (SCha)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ROBERT PONTE, Trustee of the Adam Ponte
Trust dated July 30, 1993 and Trustee of the
Irene Ponte Trust dated July 30, 1993,
Plaintiff,
vs.
Case No. 13-10370
DWAYNE McLACHLAN, an individual,
former Pittsfield Township Assessor;
JULIE ALBERT, Pittsfield Township Assessor,
PITTSFIELD CHARTER TOWNSHIP;
MANDY GREWAL, Pittsfield Township
Supervisor; ALAN ISRAEL, Pittsfield Township
Clerk; PATRICIA TUPACZ-SCRIBNER,
Pittsfield Township Trustee; STEPHANIE HUNT,
Pittsfield Township Trustee, GERALD KRONE,
Pittsfield Township Trustee; FRANK LOTFIAN,
Pittsfield Township Trustee; and MICHAEL YI,
Pittsfield Township Trustee, last seven collectively
the Pittsfield Charter Township Board of
Trustees; CATHERINE McCLARY, Washtenaw
County Treasurer, jointly and severally,
HON. AVERN COHN
Defendants.
______________________________________/
MEMORANDUM AND ORDER GRANTING DEFENDANT WASHTENAW COUNTY
TREASURER’S MOTION TO DISMISS (Doc. 44) AND GRANTING DEFENDANTS
TOWNSHIP’S, McLACHLAN’S, ALBERT’S, GREWAL’S, ISRAEL’S, SCRIBNER’S,
HUNT’S, KRONE’S, LOTFIAN’S AND YI’S MOTION TO DISMISS (Doc. 45) AND
DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE A THIRD AMENDED
COMPLAINT (Doc. 46) AND DENYING PLAINTIFF’S MOTION TO STRIKE (Doc. 62)
I. INTRODUCTION
This is a 42 U.S.C. § 1983 and Racketeer Influenced and Corrupt Organization Act
(RICO), 18 U.S.C. § 1961, et seq. case. Plaintiff Robert Ponte (Plaintiff) is the trustee of
the Adam Ponte Trust and the Irene Ponte Trust (the “trusts”), both dated July 30, 1993.
Together, the trusts own four parcels of land, covering approximately 110 acres, in Pittsfield
Township, Washtenaw County. Nearly 60 acres is comprised of vacant farmland; 50 acres
is farmed.
Plaintiff’s second amended complaint (Doc. 41) claims that Defendants formulated
a plot to impose unconstitutional burdens on the trusts’ property by levying exorbitant real
property taxes. It is in two counts, phrased by Plaintiff as follows:
Count I
Deprivation of Constitutional Rights under Color of Law, 42 U.S.C. §
1983 et seq.
Count II
RICO, 18 U.S.C. § 1961, et seq.
Before the Court are two separate motions to dismiss filed by Defendants (Docs. 44
and 45); Plaintiff’s motion for leave to file a third amended complaint (Doc. 46); and
Plaintiff’s motion to strike (Doc. 62). Particularly the following papers have been filed:
Doc. 44
Defendant Washtenaw County Treasurer’s Motion To Dismiss
Plaintiff’s Complaint Pursuant To Fed. R. Civ. P. 12(b)(6) (25 pages
and 15 exhibits);
Doc. 45
Motion To Dismiss Plaintiff’s Second Amended Complaint Under
Federal Rule Of Civil Procedure 12(b)(6) On Behalf Of Defendants
Pittsfield Charter Township, Dwayne McLachlan, Julie Albert, Mandy
Grewal, Alan Israel, Patrica Tupacz-Scribner, Stephanie Hunt, Gerald
Krone, Frank Lotfian, and Michael Yi (29 pages and 3 exhibits);
Doc. 46
Plaintiff’s Motion For Leave To File (Proposed) Third Amended
Complaint (11 pages and 1 exhibit);
Doc. 47
Plaintiff’s Brief Responding To Defendant-Treasurer’s Motion To Deny
Subject Matter Jurisdiction Under The Rooker-Feldman Abstention
Doctrine And To Defendants’ Motions To Dismiss For Failure To State
A § 1983 Claim (26 pages);
Doc. 48
Plaintiff’s Brief Responding To Defendants’ Motions To Dismiss For
Failure To State A Rico Claim (23 pages and 1 exhibit);
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Doc. 55
Response Brief In Opposition To Plaintiff’s Motion For Leave To File
(Proposed) Third Amended Complaint On Behalf Of Defendants
Pittsfield Charter Township, Dwayne McLachlan, Julie Albert, Mandy
Grewal, Alan Israel, Patrica Tupacz-Scribner, Stephanie Hunt, Gerald
Krone, Frank Lotfian, and Michael Yi (22 pages);
Doc. 56
Defendant Washtenaw County Treasurer’s Brief In Opposition To
Plaintiff’s Motion For Leave To File (Proposed) Third Amended
Complaint (15 pages and 5 exhibits);
Doc. 57
Plaintiff’s Brief Replying To Township Defendants’ Brief Responding
To Plaintiff’s Motion For Leave To File (Proposed) Third Amended
Complaint (9 pages);
Doc. 59
Plaintiff’s Answer To County Treasurer’s Brief Responding To
Plaintiff’s Motion For Leave To File (Proposed) Third Amended
Complaint and Brief Replying To Township Defendants’ Brief
Responding To Plaintiff’s Motion For Leave To File (Proposed) Third
Amended Complaint (10 pages);
Doc. 60
Defendant Washtenaw County Treasurer’s Reply Brief In Support Of
Motion To Dismiss Plaintiff’s Complaint Pursuant To Fed. R. Civ. P.
12(b)(6) (14 pages and 6 exhibits);
Doc. 61
Reply Brief In Support Of Motion To Dismiss Plaintiff’s Second
Amended Complaint Under Federal Rule Of Civil Procedure 12(b)(6)
On Behalf Of Defendants Pittsfield Charter Township, Dwayne
McLachlan, Julie Albert, Mandy Grewal, Alan Israel, Patrica TupaczScribner, Stephanie Hunt, Gerald Krone, Frank Lotfian, and Michael
Yi (13 pages); and
Doc. 62
Plaintiff’s Motion To Strike Defendant County Treasurer’s Brief
Replying To Plaintiff’s Response To Defendant County Treasurer’s
Motion To Dismiss (8 pages and 3 exhibits).
For the reasons that follow:
Defendant Washtenaw County Treasurer’s Motion to Dismiss is GRANTED;
Defendants Township’s, McLachlan’s, Albert’s, Grewal’s, Israel’s, Scribner’s, Hunt’s,
Krone’s, Lotfian’s and Yi’s Motion to Dismiss is GRANTED;
Plaintiff’s Motion for Leave to File an amended complaint is DENIED; and
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Plaintiff’s Motion To Strike is DENIED.1
This case is DISMISSED.
II. BACKGROUND
Fairly read, the second amended complaint says that the Defendants conspired to
overvalue the trusts’ property. Thus, according to Plaintiff, the trusts’ property taxes are
excessive and unconstitutional.
A. The Administrative/State Court System
Under the Michigan General Property Tax Act (the “GPTA”), “all property, real and
personal . . . , shall be subject to taxation.” Mich. Comp. Laws § 211.1. The process
begins by an annual assessment of property “made by an assessor who has been certified
as qualified. . . .” Id. § 211.10d(1). To this end, assessors “shall use only the official
assessor’s manual or any manual approved by the state tax commission, consistent with
the official assessor’s manual, with their latest supplements . . . , as a guide in preparing
assessments.” Id. § 211.10e. Property is “assessed at 50% of its true cash value under
section 3 of article IX of the state constitution of 1963.” Id. § 211.27a(1); see also Mich.
Const. Art. IX, § 3.
The GPTA defines true cash value as “the usual selling price at the place where the
property to which the term is applied is at the time of assessment, being the price that could
be obtained for the property at private sale.” Mich. Comp. Laws § 211.27(1). Several
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Plaintiff argues that the Treasurer’s reply brief should be stricken because it adds an
argument that was not included in the Treasurer’s original brief. The Court will not strike
the Treasurer’s reply brief on this basis. The parties have had the benefit of oral
argument and Plaintiff responded to the Treasurer’s reply brief in his motion to strike.
The motion is, therefore, DENIED.
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factors may be considered by the assessor in determining the true cash value of a parcel
of property. These factors include comparable sales of similar property at a public auction,
the advantages and disadvantages of location, zoning restrictions, and existing use, among
other things. Id.
The GPTA provides a process for an aggrieved taxpayer to seek review of an
assessment. The first step is appealing to the township board of review. The board of
review has the power to review the true cash value of the property. Mich. Comp. Laws §
211.29(2); § 211.30(4). If the taxpayer/property owner is dissatisfied, he “may appeal the
contested portion of the assessment . . . to the tax tribunal. . . .” Mich. Comp. Laws §
205.22(1). However, “[a] protest to the Board of Review is a statutory prerequisite to the
exercise of jurisdiction by the [Michigan Tax Tribunal].” Abundant Life Christian Ctr. v.
Mich. Charter Twp. of Redford, No. 310713, 2013 WL 3957708, at *1 (Mich. Ct. App. Aug.
1, 2013) (citations omitted).
If a taxpayer is dissatisfied with the tax tribunal’s decision, he “may take an appeal
by right . . . to the court of appeals.” Id. § 205.22(3). “The taxpayer . . . may take further
appeal to the supreme court in accordance with the court rules provided for appeals to the
supreme court.” Id.
B. Plaintiff’s Course of Action
Plaintiff disagreed with the assessor’s assessment of the trusts’ property in 2009 and
2010 because he says that the property did not draw any offers when listed at a fraction
of the assessed value. Because Plaintiff disagreed with the assessor’s calculation of the
true cash value of the property, he says he petitioned the December 2010 board of review
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for qualified error.2
Plaintiff, however, does not provide his application or any
correspondence between him and the board of review. In addition, Plaintiff’s complaint
claims differential and discriminatory tax treatment, an issue that does not fall within the
ambit of “qualified error.” Plaintiff says that “[q]ualified error was simply not the sort of
petition that the [b]oard of [r]eview cared to hear and decide.” (Doc. 41 at 6, ¶ 21).
In July of 2011, Plaintiff says that he appealed the board of review’s refusal to hear
the trusts’ petition for “qualified error” to the Michigan Tax Tribunal. Plaintiff does not
provide any correspondence between him and the tax tribunal, nor does he provide any
decisions that were issued by the tax tribunal. Plaintiff says that the tax tribunal issued an
Order of Partial Dismissal and Order Placing Petitioner in Default, summarily upholding the
board of review’s refusal to hear the trusts’ petition for “qualified error.” To cure an
unrelated defect having to do with the trusts’ adjacent parcels, the tax tribunal required
Plaintiff to amend the petition.
For reasons not explained in the second amended complaint, Plaintiff says that the
tax tribunal held a hearing on July 10, 2012 to determine whether the trusts’ property was
properly assessed. The tax tribunal heard testimony regarding comparable sales. Plaintiff
says that, after the hearing, “the [t]ribunal refused to rehear its unsolicited refusal to hear
the [trusts’] petition for qualified error.” (Doc. 41 at 10, ¶ 44). Again, Plaintiff does not
provide a transcript, order, or decision of the tax tribunal.
By the beginning of 2013, the 2010 taxes on the trusts’ property remained unpaid.
2
Qualified error allows a taxpayer to dispute an assessed value and is statutorily
defined. Mich. Comp. Laws § 211.53b(8). Among other things, a taxpayer may assert
qualified error based on a clerical error, a mutual mistake of fact, or an error regarding
the correct taxable status of the real property being assessed.
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On February 20, 2013, the treasurer obtained a final Judgment of Foreclosure by way of
in rem tax foreclosure proceedings for properties having unpaid 2010 property taxes, which
included the trusts’ property. The trusts redeemed the property within the redemption
period by paying the 2010 taxes.
The second amended complaint also contains a multitude of irrelevant facts such
as the history of the sale of the property and zoning changes. Boiled down to the relevant
facts, Plaintiff is claiming that the trusts’ property is over-assessed in an unconstitutional
manner.
III. STANDARD OF REVIEW
A. Motion to Dismiss
A motion to dismiss under Fed. R. Civ. P. 12(b)(6) tests the sufficiency of a
complaint.
To survive a Rule 12(b)(6) motion to dismiss, the complaint's “factual
allegations must be enough to raise a right to relief above the speculative level on the
assumption that all of the allegations in the complaint are true.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 545 (2007). See also Ass’n of Cleveland Fire Fighters v. City of
Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir. 2007). The Court is “not bound to accept as
true a legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (internal quotation marks and citation omitted). Moreover, “[o]nly a complaint
that states a plausible claim for relief survives a motion to dismiss.” Id. at 679. Thus, “a
court considering a motion to dismiss can choose to begin by identifying pleadings that,
because they are no more than conclusions, are not entitled to the assumption of truth.”
Id. “While legal conclusions can provide the framework of a complaint, they must be
supported by factual allegations. When there are well-pleaded factual allegations, a court
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should assume their veracity and then determine whether they plausibly give rise to an
entitlement to relief.” Id. In sum, “[t]o survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its
face.” Id. at 678 (internal quotation marks and citation omitted).
B. Motion to Amend
Fed. R. Civ. P. 15(a)(2) allows a party to amend its complaint after a responsive
pleading has been filed, with written consent of the opposing party or the court’s leave.
“The court should freely give leave when justice so requires.” Fed. R. Ci. P. 15(a)(2).
Although Rule 15 states that leave “shall be freely given” when the underlying facts would
support a claim, grounds for denying a motion for leave to amend include undue delay, bad
faith or dilatory motive on the part of the movant, failure to cure deficiencies by
amendments previously allowed, lack of notice to the opposing party, prejudice to the
opposing party, and futility of the amendment. Brumbalough v. Camelot Care Ctrs., Inc.,
427 F.3d 996, 1001 (6th Cir. 2005).
The decision whether or not to permit the amendment is committed to the discretion
of the trial court. See, e.g., Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321,
330-32 (1971); Estes v. Kentucky Util. Co., 636 F.2d 1131, 1133 (6th Cir. 1980). This
discretion, however, is “limited by Fed. R. Civ. P. 15(a)’s liberal policy of permitting
amendments to ensure the determination of claims on their merits,” rather than the
technicalities of pleadings. Marks v. Shell Oil Co., 830 F.2d 68, 69 (6th Cir. 1987) (citation
omitted); Tefft v. Seward, 689 F.2d 637, 639 (6th Cir. 1982)). When denying a motion to
amend, a court must find “at least some significant showing of prejudice to the opponent.”
Moore v. City of Paducah, 790 F.2d 557, 562 (6th Cir. 1986). Delay to the other party,
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standing alone, is not enough to bar the amendment if the other party is not prejudiced.
Id. (citation omitted).
Moreover, proper grounds to deny a motion to amend exist if the amendment
would be futile. Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir.
2000). “A proposed amendment is futile if the amendment could not withstand a Rule
12(b)(6) motion to dismiss.” Riverview Health Inst., LLC v. Med. Mut. of Ohio, 601 F.3d
505 (6th Cir. 2010) (citation and internal quotations omitted).
IV. DISCUSSION
A. Dismissal is Appropriate Under the Comity Doctrine
Under the Supreme Court’s precedents, the doctrine of comity renders federal court
jurisdiction inappropriate in this matter because the trusts have an adequate remedy
available in the state court system.
The Supreme Court in Fair Assessment in Real Estate Ass’n, Inc. v. McNary, 454
U.S. 100 (1981) explained that principles of comity bar federal court actions brought under
§ 1983 to redress the allegedly unconstitutional administration of a state tax system. In
McNary, petitioners were real property owners who filed suit under § 1983 “alleging that
respondents, the County’s Tax Assessors, Supervisors, and Director of Revenue, and three
members of the Missouri State Tax Commission, had deprived them of equal protection
and due process of law by unequal taxation of real property.” Id. at 105–06. The Supreme
Court reasoned that principles of federalism prevented federal courts from invoking
jurisdiction in such matters.
First, the Supreme Court reasoned that the petitioners would not “recover damages
under § 1983 unless a district court first determines that respondents’ administration of the
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County tax system violated petitioners’ constitutional rights.” Id. at 113. This, the Supreme
Court stated, would in essence require the district court to enter a declaratory judgment
which “would be fully as intrusive as the equitable actions that are barred by principles of
comity.” Id. In addition, the Supreme Court stated that “the intrusiveness of such § 1983
actions would be exacerbated by the nonexhaustion doctrine of Monroe v. Pape, 365 U.S.
167 (1961)” because “[t]axpayers such as petitioners would be able to invoke federal
judgments without first permitting the State to rectify any alleged impropriety.” Id. at
113–14.
Second, the Supreme Court explained that “the very maintenance of the suit itself
would intrude on the enforcement of the state scheme.” Id. at 114. Quoting the district
court’s opinion, the Supreme Court stated:
“To allow such suits would cause disruption of the states’
revenue collection systems equal to that caused by anticipatory
relief. State tax collection officials could be summoned into
federal court to defend their assessments against claims for
refunds as well as prayers for punitive damages, merely on the
assertion that the tax collected was willfully and maliciously
discriminatory against a certain type of property. Allowance of
such claims would result in this Court being a source of
appellate review of all state property tax classifications.”
Id. (quoting 478 F. Supp. 1231, 1233–34 (1979)). The chilling effect of allowing § 1983
actions against key state tax officials and subjecting them to the prospect of personal
liability to numerous taxpayers, as described by the Supreme Court, would “operate to
suspend collection of the state taxes . . . , a form of federal-court interference previously
rejected by this Court on principles of federalism.” Id. at 115 (internal citation omitted).
In concluding, the Supreme Court stated:
Therefore, despite the ready access to federal courts provided
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by Monroe and its progeny, we hold that taxpayers are barred
by the principle of comity from asserting § 1983 actions against
the validity of state tax systems in federal courts. Such
taxpayers must seek protection of their federal rights by state
remedies, provided of course that those remedies are plain,
adequate, and complete, and may ultimately seek review of the
state decisions in this Court. See Huffman v. Pursue, Inc., 420
U.S. 592, 605 (1975); Matthews v. Rodgers, 284 U.S. 521, 526
(1932).
Id. at 116.
The Supreme Court recently addressed the same issue in Levin v. Commerce
Energy, Inc., 560 U.S. 413, 130 S.Ct. 2323 (2010). In Levin, independent marketers selling
natural gas to Ohio consumers sued the Ohio Tax Commissioner in federal court alleging
Ohio’s preferential tax treatment to local distribution companies of natural gas–by way of
three tax exemptions not available to independent marketers–was discriminatory under the
Commerce and Equal Protection Clauses. In other words, the independent marketers
complained that they were taxed unevenly in comparison to local distribution companies.
Id. at 2333. The Supreme Court confirmed that comity concerns require federal courts to
“refrain from taking up cases of this genre, so long as state courts are equipped fairly to
adjudicate them.” Id. at 2334. As explained by the Supreme Court, if a state tax scheme
is unconstitutionally discriminatory to a certain class, the state courts and legislature are
better positioned to address the situation. Id. at 2335 (citing Davis v. Mich. Dep’t of
Treasury, 489 U.S. 803, 817–18 (1989)).
Like McNary and Levin, the comity doctrine requires dismissal of Plaintiff’s federal
court action. Accepting the allegations in Plaintiff’s second amended complaint as true, this
case belongs in state court. A comprehensive administrative scheme is available for the
trusts to challenge the property assessments in question. If unsatisfied, or if the trusts want
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to raise constitutional claims, the state courts are equally equipped to hear § 1983 and
RICO claims. Because a plain, adequate, and complete remedy is available in the state
courts, and the trusts may ultimately seek review of the state court decisions in the United
States Supreme Court, this action is not appropriate in this Court.
B. Plaintiff’s Proposed Third Amended Complaint is Futile
Plaintiff’s proposed third amended complaint does not do anything to save his
claims. Aside from proposing the addition of another defendant, Plaintiff’s proposed third
amended complaint is virtually identical to the second. Therefore, the same comity
concerns render jurisdiction inappropriate.
V. CONCLUSION
For the reasons stated above,
the Treasurer’s motion to dismiss was granted;
the Township’s, McLachlan’s, Albert’s, Grewal’s, Israel’s, Scribner’s, Hunt’s,
Krone’s, Lotfian’s and Yi’s motion to dismiss was granted;
Plaintiff’s motion to amend was denied; and
Plaintiff’s motion to strike was denied.
SO ORDERED.
S/Avern Cohn
UNITED STATES DISTRICT JUDGE
Dated: September 12, 2013
I hereby certify that a copy of the foregoing document was mailed to the attorneys of record
on this date, September 12, 2013, by electronic and/or ordinary mail.
S/Sakne Chami
Case Manager, (313) 234-5160
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