No. 79-1308.
July 23, 1980.
Durwood T. Pye, Pye, Groover Dailey, Atlanta, Ga., Emmett P. Johnson, Baxley, Ga., for plaintiffs-appellants.
L. Clifford Adams, Jr., Atlanta, Ga., Thomas S. Gray, Jr., Savannah, Ga., Robert P. Edwards, Jr., James E. Joiner, Atlanta, Ga., for Municipal Electric Auth. of Ga.
Appeal from the United States District Court for the Southern District of Georgia.
Before GEE, FAY and RANDALL, Circuit Judges.
PER CURIAM:
On the basis of the order of the district court, a copy of which is appended hereto, the above cause is AFFIRMED.
APPENDIX
IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF GEORGIA BRUNSWICK DIVISION
ORDER
ad valorem ad valorem 28 U.S.C. § 2201 Ga. Code Ann. Ga. Code Ann. Ga. Code Ann. Ga. Code Ann. inter alia, 28 U.S.C. § 2201 See Federal Practice Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667 70 S.Ct. 876 94 L.Ed. 1194 28 U.S.C. § 1331 42 U.S.C. § 1983 28 U.S.C. § 1343 I.
28 U.S.C. § 1341 28 U.S.C. § 1341 Coon v. Teasdale, 567 F.2d 820 821 See Hargrave v. McKinney, 413 F.2d 320 See also Bland v. McHann, 463 F.2d 21 26 cert. denied 410 U.S. 966 93 S.Ct. 1438 35 L.Ed.2d 700 Battle v. Cherry, 339 F. Supp. 186 28 U.S.C. § 1341 See, e.g., Great Lakes Dredge Dock Co. v. Huffman, 319 U.S. 293 63 S.Ct. 1070 87 L.Ed. 1407 additional Hargrave v. Kirk, 313 F. Supp. 944 reversed on other grounds sub nom., Askew v. Hargrave, 401 U.S. 476 91 S.Ct. 856 28 L.Ed.2d 196 Accord Cornelius v. Benevolent Protective Order of Elks, 382 F. Supp. 1182 II.
L N R.R. v. Mottley, 211 U.S. 149 29 S.Ct. 42 53 L.Ed.2d 126 See also Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125 94 S.Ct. 1002 39 L.Ed.2d 209 i.e., ad valorem status quo, Compare Bell v. Hood, 327 U.S. 678 66 S.Ct. 773 90 L.Ed. 939 Compare Hagans v. Lavine, 415 U.S. 528 538-539 94 S.Ct. 1372 1380 39 L.Ed.2d 577 Ga. Code Ann. ad valorem * * * * * *
Carmichael v. Southern Coal Coke Co., 301 U.S. 495 509 57 S.Ct. 868 872 81 L.Ed. 1245 Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356 359-360 93 S.Ct. 1001 1004 35 L.Ed.2d 351 Harper v. Virginia Board of Elections, 383 U.S. 663 666 86 S.Ct. 1079 1081 16 L.Ed.2d 169 Allied Stores of Ohio v. Bowers, 358 U.S. 522 526-527 79 S.Ct. 437 440 3 L.Ed.2d 480 Fourteenth also Desco Products Caribbean, Inc. v. Government of Virgin Islands, 511 F.2d 1157 1160 Byrd v. Blue Ridge Rural Electrical Cooperative, Inc., 215 F.2d 542 cert. denied, 348 U.S. 915 75 S.Ct. 295 99 L.Ed. 717 South Carolina Power Co. v. South Carolina Tax Commission, 52 F.2d 515 aff'd, 286 U.S. 525 52 S.Ct. 494 76 L.Ed. 1268 Bell v. Health-Mor, Inc., 549 F.2d 342 344 Hilgeman v. National Ins. Co., 547 F.2d 298 300 Olivares v. Martin, 555 F.2d 1192 1195 Carmichael v. Southern Coal Coke Co., supra. Ga. Code Ann. et seq., Blackman v. City of Big Sandy, Texas, 377 F. Supp. 771 aff'd, 507 F.2d 935 i.e., See Louisiana v. Pilsbury, 105 U.S. 278 26 L.Ed. 1090 Louisiana ex rel. Hubert v. New Orleans, 215 U.S. 170 30 S.Ct. 40 54 L.Ed. 144 W. B. Worthen Co. v. Kavanaugh, 295 U.S. 56 55 S.Ct. 555 79 L.Ed. 1298 Home Building Loan Association v. Blaisdell, 290 U.S. 398 54 S.Ct. 231 78 L.Ed. 413 See also United States Trust Co. v. New Jersey, 431 U.S. 1 97 S.Ct. 1505 52 L.Ed.2d 92 ad valorem Compare Warth v. Seldin, 422 U.S. 490 498-499 95 S.Ct. 2197 2205 45 L.Ed.2d 343 28 U.S.C. § 1331 ad valorem Alvarez v. Pan American Life Insurance Co., 375 F.2d 992 cert. denied 389 U.S. 827 88 S.Ct. 74 19 L.Ed.2d 82 See also Schreiber v. Lugar, 518 F.2d 1099 Buckingham v. Lord, 326 F. Supp. 218 Allanson v. Camp, 324 F. Supp. 734 See generally, Annot., Trenton v. New Jersey, 262 U.S. 182 43 S.Ct. 534 67 L.Ed. 937 ad valorem City of Safety Harbor v. Birchfield, 529 F.2d 1251 1254-1255 Dartmouth College v. Woodward, 4 L.Ed. 629 4 L.Ed. at 664 Williams v. Mayor and City Council of Baltimore, 289 U.S. 36 40 53 S.Ct. 431 432 77 L.Ed. 1015 1020 Railroad Commission v. Los Angeles R. R., 280 U.S. 145 156 50 S.Ct. 71 73-74 74 L.Ed. 234 329 Risty v. Chicago, R. I. P. R. R., 270 U.S. 378 390 46 S.Ct. 236 241 70 L.Ed. 641 651 City of New York v. Richardson, 473 F.2d 923 929 Lavine v. Lindsay, 412 U.S. 950 93 S.Ct. 3012 37 L.Ed.2d 1002 Trenton v. New Jersey, 262 U.S. 182 43 S.Ct. 534 67 L.Ed. 937 Williams v. Mayor and City Council of Baltimore, Pawhuska v. Pawhuska Oil Gas Co., 250 U.S. 394 398 39 S.Ct. 526 528 63 L.Ed. 1054 1057 City of New Orleans v. New Orleans Water Works Co., 142 U.S. 79 12 S.Ct. 142 35 L.Ed. 943 is Fourteenth Monell v. Department of Social Services of the City of New York, 436 U.S. 658 98 S.Ct. 2018 56 L.Ed.2d 611 42 U.S.C. § 1983 Monell Williams v. Mayor and City Council of Baltimore, 289 U.S. 36 40 53 S.Ct. 431 432 77 L.Ed. 1015 Monell 42 U.S.C. § 1983 Monell III.
See generally, Jackson v. Metropolitan Edison Co., 419 U.S. 345 95 S.Ct. 449 42 L.Ed.2d 477 See, e. g., Howard v. State Department of Highways of Colorado, 478 F.2d 581 /s/ Anthony A. Alaimo APPLING COUNTY, * CIVIL ACTION JAUNICE PRESLEY, DAVID BURKE, * NO. 278-66 BRICE BEECHER, BEN WEAVER, * NORMAN HOLLIS, and JOHNNIE THORNTON, * Plaintiffs * VS. * MUNICIPAL ELECTRIC AUTHORITY * OF GEORGIA and GEORGIA POWER COMPANY * Defendants * The above-styled action involves the collection of taxes in Appling County, Georgia. Plaintiffs, the County, itself, and individual citizens and taxpayers of Appling County, seek to impose taxes on that portion of the Edwin I. Hatch Nuclear Plant located in Appling County, which is owned by the Municipal Electric Authority of Georgia, hereinafter (MEAG). To this end, plaintiffs seek declaratory relief pursuant to , alleging that MEAG's interest in Plant Hatch is in fact not tax-exempted "property" and that defendant, Georgia Power, should pay taxes on Plant Hatch in its entirety. Plaintiffs allege further that the defendants have in combination "misused" MEAG's statutory exemption from taxation and have thereby deprived plaintiffs of due process and equal protection of the law. Defendants are also said to have violated the contract impairment clause in Article I of the Constitution. Plaintiffs pray that the Court declare that the entirety of Plant Hatch is subject to taxation, that MEAG's 17.7% interest is not exempt from taxation, or alternatively that the 17.7% interest is not exempt from taxation for the payment of principal and interest on certain County bonds. The case is presently before the Court on defendants' motions to dismiss on various grounds. The purpose of the Municipal Electric Authority of Georgia which was created by the Georgia Legislature, § 34B-401 et seq., is: ". . . to acquire and construct, and operate and maintain or cause to be constructed, operated, and maintained electric generation and transmission facilities, and to take all other necessary or desirable action, in order to provide or make available an adequate, dependable, and economic supply of electric power and energy and related services for such of said political subdivisions of the State of Georgia as are hereinafter identified in section 34B-427, as may desire the same and, incidentally and so as to take advantage of economies of scale in the generation and transmission of electric power and energy, to other persons and entities." § 34B-403. The property of the Authority is declared by statute to be public property and is statutorily exempted from taxation by the State or any of its political subdivisions, § 34B-406. Pursuant to §§ 34B-407, 34B-408 and 34B-427, MEAG purchased from Georgia Power a 17.7% undivided interest in the Hatch Nuclear Plant. MEAG supplies electrical power to 47 political subdivisions in Georgia, though not to Appling County. Defendants move to dismiss on grounds, that the Court lacks subject-matter jurisdiction of the action. Of course, the fact that the plaintiffs seek declaratory relief under , does not absolve them of the necessity of bringing themselves within a jurisdictional statute. 6A J. Moore, ¶ 57.23 (2d ed. 1974); , , (1950). Plaintiffs attempt to bring themselves within the Court's federal question jurisdiction under , and they also allege subject-matter jurisdiction under and its jurisdictional counterpart, . Defendants argue that the Tax Injunction Act, , deprives the Court of jurisdiction and requires dismissal of the complaint. The Act 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." . While a suit seeking declaratory relief can fall within the scope of § 1341's prohibition, , n. 2 (8th Cir. 1977), under Fifth Circuit precedents, § 1341 is inapplicable to the present action because it seeks not to inhibit the collection of taxes, but to require the collection of additional taxes. (5th Cir. 1969). , n. 21 (5th Cir. 1972), , , (1973); (N.D.Ga. 1972). Apart from , a judicially created doctrine of abstention appertains to cases in federal court involving state tax administration. , , (1943). However, this judicial abstention doctrine has also been held inapplicable where the suit seeks to require taxes. (M.D. Fla. 1970) (three-judge court), , , (1971). (D. Conn. 1974). Defendants cite , , (1908), for the proposition that a federal district court has subject-matter jurisdiction under § 1331 only when plaintiff's statement of his own cause of action shows that it is based on federal law. , , (1974). Defendants argue that there is no federal question jurisdiction under § 1331 because the plaintiffs' Constitutional claims are alleged only in anticipation of a defense which the defendants will assert, MEAG's statutory exemption from taxation. The allegations that Georgia Power did not really transfer any taxable "property" to MEAG when it conveyed the 17.7% interest in Plant Hatch, and that the defendants have "misused" MEAG's statutory tax exemption are clearly based on state law. However, plaintiffs' Constitutional claims cannot be characterized as merely anticipating the defense of MEAG's statutory exemption. Plaintiffs seek to impose taxes on Plant Hatch in its entirety, alleging that under the they are being deprived of their constitutional rights of due process and equal protection. , , (1946). There remains, however, the question of whether the Constitutional claims are so insubstantial as to defeat jurisdiction. , , , , (1974). The Court concludes that the question must be answered in the affirmative and that plaintiffs' Constitutional claims can fairly be characterized as insubstantial. From plaintiffs' complicated and lengthy pleadings, their Constitutional claims can be distilled to the following: 1. The fact that the County cannot tax the 17.7% of Plant Hatch which was conveyed to MEAG, coupled with the fact that MEAG's share of the electric power generated at Plant Hatch is transmitted to political subdivisions other than Appling County deprive plaintiffs of equal protection or due process, or both. (Under § 34B-427, MEAG is authorized to contract to provide an electric power supply only with those political subdivisions of the state which " . . . on the date this Chapter becomes law own and operate an electric distribution system. Appling County is not among those political subdivisions.) 2. The plaintiffs claim that their inability to tax Plant Hatch in its entirety constitutes a violation of the contract impairment clause because the County must pay the principal and interest on certain outstanding bonds from proceeds, previously pledged to bond retirement. The insubstantiality of plaintiffs' Constitutional claims is evident from well established Supreme Court precedents: "This Court has repeatedly held that inequalities which result from a singling out of one particular class for taxation or exemption infringe no constitutional limitation. "A legislature is not bound to tax every member of a class or none. It may make distinctions of degree having a rational basis, and when subject to judicial scrutiny they must be presumed to rest on that basis if there is any conceivable state of facts which would support it." , , , , (1937). The Supreme Court expounded on this principle in the recent case of , , , , (1973), a case involving an Illinois tax scheme which imposed a personal property tax on corporations, but not on individuals: "The Equal Protection Clause does not mean that a State may not draw lines that treat one class of individuals or entities differently from the others. The test is whether the difference in treatment is an invidious discrimination. , , , , . Where taxation is concerned and no specific federal right, apart from equal protection, is imperiled, the States have large leeway in making classifications and drawing lines which in their judgment produce reasonable systems of taxation. As stated in , , , , : `The States have a very wide discretion in the laying of their taxes. When dealing with their proper domestic concerns, and not trenching upon the prerogatives of the national Government or violating the guaranties of the Federal Constitution, the States have the attribute of sovereign powers in devising their fiscal systems to ensure revenue and foster their local interests. Of course, the States, in the exercise of their taxing power, are subject to the requirements of the Equal Protection Clause of the Amendment. But that clause imposes no iron rule of equality, prohibiting the flexibility and variety that are appropriate to reasonable schemes of state taxation. The State may impose different specific taxes upon different trades and professions and may vary the rate of exercise upon various products. It is not required to resort to close distinctions or to maintain a precise, scientific uniformity with reference to composition, use or value.' "In that case we used the phrase `palpably arbitrary' or `invidious' as defining the limits placed by the Equal Protection Clause on state power." See , (3d Cir. 1975); (4th Cir. 1954), , , (1955); (E.D. S.C. 1931), , , (1932). The Fifth Circuit has recently held that: " . . . a complaint which alleges the existence of a federal question establishes jurisdiction, so that a dismissal for lack of jurisdiction is appropriate only when the court decides that a claim is frivolous or insubstantial, i.e., a claim that has no plausible foundation, or when the court concludes that a prior Supreme Court decision clearly forecloses the claim. See , (5th Cir. 1977); , (5th Cir. 1977)." , (5th Cir. 1977). Here, under standards well-established by the Supreme Court, MEAG's statutorily conferred exemption is valid unless irrational and ". . . when subject to judicial scrutiny [the exemption] must be presumed to rest on [a rational] basis if there is any conceivable state of facts which would support it." Under this standard, the plaintiffs' Constitutional claims are clearly insubstantial, and lack any plausible foundation. The Georgia statutes creating and governing MEAG, § 34B-401 are patently rational and are free from arbitrary discrimination. A strikingly similar case is (E.D.Tex. 1974), (5th Cir. 1975). In that case, the owners of a service station challenged on Constitutional grounds a zoning ordinance which prohibited the sale of alcoholic beverages within 300 feet of any hospital, church or school. The Standard for determining the Constitutional validity of the zoning ordinance was the same standard applicable to the tax exemption in the instant case, is the ordinance rational or is it arbitrarily discriminatory? The district court held that the ordinance was clearly not arbitrary, and it dismissed the complaint, finding that no substantial federal question was presented. The Fifth Circuit affirmed. The plaintiffs' contention under the Contract Clause of Article I, Section X, of the Constitution ["No state shall . . . pass any . . . law impairing the obligation of contracts"] is frivolous. Plaintiffs allege in Paragraph 31 of the complaint that from 1966 to 1974, Appling County has issued various general obligation bonds for hospital, courthouse, and school purposes. Plaintiffs allege further that: "These bonds are all now in the hands of purchasers who acquired the bonds in good faith, relying upon the contracts which resulted from the issuance and sale of the bonds, including the contract obligation which bound all the taxable property of Appling County for the payment of the principal and interest on said bonds according to the laws then of force. * * The actions of defendants whereby they undertake to exempt from taxation for the payment of said bonds the aforesaid 17.7% interest is in derrogation of the aforesaid contract. It is violative of the Constitution of the United States, Article I, Section X, providing that no State shall pass any law impairing the Obligation of Contracts, for the Authority acts as an instrumentality of the State of Georgia, pursuant to said Act of 1975 creating it, and Georgia Power Company confederates, combines and contracts to such unlawful end. So much of said Act of 1975, approved March 19, 1975 (Georgia Laws 1975, p. 107) as in Section 6 thereof provides that `all of the property * of the Authority * are declared to be nontaxable for any and all purposes by the State or any of its political subdivisions'; so far as the same applies to taxation for the payment of the principal and interest on said bonds according to the tenor thereof, is null and void as violative of said Article I, Sec. X, of the Constitution of the United States, for the reason that there would be an impairment of the Obligations of Contracts if tangible property in Appling County subject to taxation for the payment of said bonds were exempted from said taxation after their issuance and sale, . . ." Paragraph 31 of Plaintiffs' Complaint. The plaintiffs' theory seems to be that all property which was "taxable property" when the bonds were issued, must remain in the County tax base, at least for the payment of principal and interest on the aforementioned bonds. Generally, when a political subdivision is authorized to contract and to exercise the power of taxation to meet its contractual obligations, the power to tax must continue until the obligations are satisfied. , (1882); , , (1909); , , (1935). But not every impairment of a contract violates the Contract Clause. That Clause does not prohibit a state from repealing or amending statutes generally or from enacting legislation with retroactive effects. The strictures of the Contract Clause must be reconciled with the "essential attributes of sovereign power." , , (1934). , , (1977). Here, the exemption of 17.7% of Plant Hatch from taxation certainly reduces the taxes which the County takes in, but there is no allegation that this reduction seriously impairs the County's ability to meet its obligations on the bonds. Moreover, the complaint alleges that the bonds are held by unspecified good faith purchasers. The Court concludes that no plaintiff has standing to challenge MEAG's exemption on the basis that it impairs the rights of the holders of County bonds. , , , , (1975). The claims of the individual plaintiffs cannot be based on federal question jurisdiction under for the additional reason that they fail to allege that their individual claims exceed $10,000. The complaint does allege that if the County could tax MEAG's interest in the Plant, it could collect an additional $831,550 in taxes. The impact that this would have on individual taxpayers is unclear. Indeed, unless the millage rates were reduced there would be no apparent impact on individual taxpayers. Defendants note correctly that each plaintiff must meet the amount in controversy requirement. These claims are "several and distinct." (5th Cir. 1967), , , (1967). (7th Cir. 1975); (D.Mont. 1971); (N.D.Ga. 1971). 2 A.L.R.Fed. 855, 868 (1969). Citing , , (1923), MEAG argues that the County's claims should also be dismissed because the County has no standing to invoke the federal Constitutional guarantees of due process and equal protection against an enactment of the State of Georgia. The Court finds this argument persuasive. Plaintiffs allege that by virtue of the fact that the County cannot impose taxes on MEAG's 17.7% interest of Plant Hatch, it is deprived of due process and equal protection. This allegation cannot be construed as anything other than a constitutional challenge to MEAG's state-conferred tax exemption, at least as applied to MEAG's interest in Plant Hatch. In , (5th Cir. 1976), the Court explained: "Ever since the Supreme Court's landmark decision in 17 U.S. (4 Wheat.) 518, (1819), it has been apparent that public entities which are political subdivisions of states do not possess constitutional rights, such as the right to be free from state impairment of contractual obligations, in the same sense as private corporations or individuals. 17 U.S. (4 Wheat.) at 660-61, . Such entities are creatures of the state, and possess no rights, privileges or immunities independent of those expressly conferred upon them by the state. Id.; , , , , , (1933); see , , , , , (1929); , , , , , (1926); 2 Cir. 1973, , , cert. denied sub nom. , , (1973). Thus, in , , (1923), the Supreme Court held that a city which had obtained its water resources by acquiring a private water company through proper exercise of its proprietary authority could not assert the right to freedom from impairment of contractual obligations because of the difference in the relation of private and public entities to the state. In contrast to private individuals and entities, municipal corporations have repeatedly been denied the right to challenge state legislation allegedly violative of the Federal Constitution. supra; , , , , , (1919) ("as respects grants of political or governmental authority to cities, towns, counties, and the like the legislative power of states is not restrained by the contract clause of the Constitution"); , , (1891)." The County argues that it a person within the meaning of the Amendment: "Nor shall any state deprive any person of life, liberty, or property without due process of law nor deny to any person . . . the equal protection of the laws." The County relies on the Supreme Court's recent decision in , , (1978), in which the Court held that a municipality was a "person" within the meaning of . However, is inapposite to the present controversy. A County or City's lack of standing to challenge state legislation on federal Constitutional grounds is based on the rationale that: "A municipal corporation, created by a state for the better ordering of government, has no privileges or immunities under the federal Constitution which it may invoke in opposition to the will of its creator." , , , , (1933). The Supreme Court's holding in is that by enacting , Congress intended to make municipalities and other political subdivisions amenable to suits brought under that section. The decision does not call into question the principle that a city or county cannot challenge a state statute on federal Constitutional grounds. There is no amount in controversy requirement under § 1983, but this statute restricts only "state action." Despite plaintiffs' conclusory allegations of concerted, combined and conspiratorial actions by the two defendants, with respect to their constitutional claims, plaintiffs do not sufficiently allege that defendant, Georgia Power Company, has acted under color of state law. , , (1974). The state action requirement is satisfied as to defendant MEAG, an official arm of the State. However, the attempt to base jurisdiction on § 1343 also fails as to defendant MEAG because, as discussed above, the plaintiffs' Constitutional claims are patently insubstantial. This lack of substantiality undermines § 1343 jurisdiction as well as § 1331 jurisdiction. (10th Cir. 1973). In sum, the Rule 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction is hereby granted in favor of both defendants. The clerk is directed to enter an appropriate judgment. So Ordered, this 4th day of January, 1979. Chief Judge, United States District Court, Southern District of Georgia