Opinion
No. WD 61742
February 18, 2003
Appeal from the Circuit Court of Morgan County, Mary Dickerson, Judge.
Steven Craig, Jefferson City, for Appellant.
Stephen McKinley Concannon, Versailles, George Alex Bartlett, Jefferson City, Todd Jones, Attorney General Office, Jefferson City, for Respondents.
Before Paul M. Spinden, Presiding Judge, Patricia A. Breckenridge, Judge, and Thomas H. Newton, Judge.
This is a tax case concerning proper construction of Missouri Constitution provisions in Article X, §§ 11(b) and 22(a). Thomas G. Thompson, Nancy S. Thompson, Richard Montgomery, James R. Campbell, Barbara M. Campbell, M. Scott Hausman, Stacy Hausman, William M. McDaniel, Ralph C. McDaniel, Stanley King, Martha King, and Patricia Hoff (taxpayers) appeal the circuit court's dismissal of their petition for tax refunds and declaratory judgments. We affirm in part, reverse in part, and remand to the circuit court.
The taxpayers owned property subject to taxation by the Morgan County R-II School District. For 2001, the school district imposed a levy of $2.75 on each $100 of assessed property valuation. They paid the tax under protest. They believed that § 11(b) did not authorize the district to increase the tax levy to $2.75 without voter approval, and that, even if it did, the formula for reducing tax revenues set out in § 22(a), commonly known as the Hancock Amendment, still applied.
The taxpayers filed a five count petition seeking refund of the property tax levied by the district, attorney fees, and declaratory judgments as to whether § 11(b) authorizes a levy increase to $2.75 without an affirmative vote, whether § 11(b) negates the applicability of § 22(a) when valuation growth exceeds inflation growth, and whether statutes in Chapter 163 require a reduction in state aid to schools when § 22(a) requires a levy reduction. The district filed a motion to dismiss each count on the ground that the petition did not state a claim for which relief could be granted. The circuit court granted the motion on each count. The taxpayers appealed to the Supreme Court, but it transferred the case to this court.
A motion to dismiss for failure to state a claim for which relief can be granted is an attack on the sufficiency of the plaintiff's petition. Bosch v. St. Louis Healthcare Network, 41 S.W.3d 462, 463-64 (Mo.banc 2001). In assessing the petition's adequacy, we assume all averments to be true and give the plaintiff the benefit of all reasonable inferences to be drawn therefrom. Id. at 464. Our review is conducted in a virtually academic manner — that is, we do not attempt to weigh the facts but determine only whether the facts, as alleged in the petition, meet the elements of a recognized cause of action or one that might be appropriately adopted. Id.
We review petitions for declaratory judgment in much the same way: We deem the averments and all reasonable inferences derived from them to be true. Roy v. Missouri Department of Corrections, 23 S.W.3d 738, 742 (Mo.App. 2000). We determine whether the petition's allegations invoke principles of substantive law that, if proved, entitle the plaintiff to a declaration of rights or status. Id. If the petition's allegations are supported by facts rather than mere conclusions and if those facts demonstrate a justiciable controversy, the trial court should render a declaration. Id. at 742-43.
The taxpayers assert six points on appeal. In their first and second points, they contend that the circuit court erred in dismissing Count IV of their petition in which they sought a refund of the 2001 taxes paid to the school district under protest as provided by § 139.031. The circuit court dismissed the count because it determined that the claim was not stated with sufficient specificity to state a cause of action under § 139.031. The taxpayers contend that the circuit court also dismissed the count on the ground that the claim for 2001 taxes was untimely inasmuch as the claim was not asserted until after the taxes were due and payable.
All statutory citations refer to the 2000 Revised Statutes.
Turning first to the issue of timeliness, the taxpayers argue that § 139.031 allows a refund action to be commenced within 90 days after taxes are paid under protest. They assert that their lawsuit, commenced on January 14, 2002, was timely. The school district counters that the taxpayers misinterpret the circuit court's judgment, and that the court did not strike their § 139.031 action on that ground.
In dismissing the count, the circuit court said:
Plaintiffs also have asserted claims with respect to the property taxes for the 2001 tax year. Inasmuch as those claims were not asserted until after those taxes became due and payable, all claims which the Plaintiffs might have with respect to property taxes for the 2001 tax year, with the exception of any claims which were properly lodged and preserved pursuant to the provisions of Section 139.031, RSMo, hereinafter discussed, are also untimely and are hereby stricken and dismissed.
We added the emphasis.
We added the emphasis.
The school district points to the judgment's language that we italicized and contends that it means that all claims that the taxpayers had with respect to 2001 taxes other than their § 139.031 claim were untimely — not that the taxpayers' § 139.031 claim was untimely. We agree and dismiss the taxpayers' first point as lacking merit.
We certainly concur with the taxpayers that a § 139.031 claim is not necessarily untimely merely because it is not filed by December 31 of a given tax year. Each year, the tax book with the year's tax rates are not due for delivery to the county collector until October 31, the point at which the tax rates for the current year become official. Section 137.290; Green v. Lebanon R-III School District, 13 S.W.3d 278, 287 (Mo.banc 2000) (Wolff, J., concurring). Even were the tax bills issued and the taxes instantaneously paid under protest upon delivery of the tax book, taxpayers, depending on the circumstances, could have as few as 60 days remaining before year's end in which to file their § 139.031 refund action — not the 90 days that the General Assembly mandated in § 139.031.2 that a taxpayer is to have to file a refund action after paying under protest. The General Assembly obviously authorized refund actions that commenced after December 31 but within 90 days of paying under protest.
The taxpayers argue in their second point that they made sufficient pleadings in their claim by alleging that the school district's tax levy was unlawfully high and that they paid the property tax under protest pursuant to § 139.031. The school district contends, and the circuit court agreed, that more was required. We concur with the circuit court that more was required of the taxpayers' pleading than what they assert was required of them, but we conclude, nonetheless, that the taxpayers' pleading in this case was sufficient.
The circuit court was obligated to construe the taxpayers' allegations liberally by giving them the benefit of all inferences that could be drawn from them reasonably while disregarding all averments of conclusions not supported by factual allegations. Commercial Bank of St. Louis County v. James, 658 S.W.2d 17, 21-22 (Mo.banc 1983). The taxpayers' petition contained some conclusions, including an allegation that the levy imposed by the school district "produced a revenue windfall" at the taxpayers' expense, but it also alleged ultimate facts. Missouri's rules of civil procedure require only "fact pleading" — that is, to be deemed sufficient, a petition need plead only ultimate facts. Rule 55.05(1) (requiring a "short and plain statement of the facts showing that the pleader is entitled to relief"); ITT Commercial Finance Corporation v. Mid-America Marine Supply Corporation, 854 S.W.2d 371, 379 (Mo.banc 1993); Scheibel v. Hillis, 531 S.W.2d 285, 290 (Mo.banc 1976).
The distinction between conclusions and ultimate facts is not easily discernable. Generally, an allegation is more likely to be deemed an ultimate fact than a conclusion when it gives sufficient information to the opposing party of the character of the evidence to be introduced or the issues to be tried. See Ingle v. Case, 777 S.W.2d 301, 303-04 (Mo.App. 1989). A petition is sufficient if it invokes substantial principles of law entitling the plaintiff to relief and informs the defendant of what the plaintiff will attempt to establish at trial. Rule 55.05; Kantel Communications, Inc. v. Casey, 865 S.W.2d 685, 691 (Mo.App. 1993).
The taxpayers' petition, when viewed in the light most favorable to their claim, was sufficiently pleaded. It alleged that the school district imposed a levy of $2.75, that § 22(a) required the levy be reduced in any year where the assessed valuation increased by a larger percentage than the increase in the general price level, that valuation growth increased by a larger percentage in 2000, that the $2.75 levy was in excess of that permitted by law, and that the taxpayers paid their taxes under protest pursuant to § 139.031 to recoup taxes levied in excess of what the law permitted. Assuming that the allegations are established as true, this petition was sufficient to invoke relief under § 139.031 and to inform the school district of that which the taxpayers would attempt to establish at trial.
The school district argues that, at a minimum, the taxpayers should also be required to set out in their petition their contention as to what, in the taxpayers' view, constituted the maximum levy permissible under § 22(a), the maximum levy collectible, and what revenue the school district actually received. We disagree. To the extent that the school district persuaded the circuit court that the taxpayers' allegations were too general and needed more particularity or specificity, a motion for a more definite statement under Rule 55.27(d) was more in order than dismissal for failure to state a claim. See, e.g., Smith v. Lewis, 669 S.W.2d 558, 562 (Mo.App. 1983); Danforth v. Danforth, 663 S.W.2d 288, 300 (Mo.App. 1983). The school district filed a motion for more definite statement as an alternative to its motion to dismiss. The circuit court erred in choosing to grant the motion to dismiss rather than the motion for more definite statement.
The school district also contends that, to satisfy the conditions precedent to a refund action, the taxpayers were required to attach to their petition their written protest — or at least set forth the information contained in it. Section 139.031.1's requirements governing the payment of taxes under protest are mandatory and must be strictly followed. Stanton v. Wal-Mart Stores, Inc., 25 S.W.3d 538, 541 (Mo.App. 2000). Although failure to comply with § 139.031 negates any right to recover the controverted taxes, id., we find nothing in the statute requiring that the plaintiff's petition in a § 139.031 action include the protest letter or specifically aver satisfaction of each condition precedent to a refund action. Indeed, a petition that avers "generally that all conditions precedent have been performed or have occurred" is sufficient. Rule 55.16. Because we assume that all of a petition's averments are true and we infer all reasonable inferences from them, Bosch, 41 S.W.3d at 463-64, the taxpayers' allegation that they paid their taxes under protest pursuant to § 139.031 was sufficient to allege their compliance for purposes of pleading.
In their third point, the taxpayers assert that the circuit court erred in dismissing Count I of their petition in which they sought a declaratory judgment that § 11(b) did not authorize a levy increase to $2.75 without voter approval as required by the Hancock Amendment. We agree.
In dismissing the count, the circuit court said:
Plaintiffs in their Petition refer to the provisions of [§ 11(b)] which the voters of Missouri approved at the general election in 1998. . . . By reason of the adoption of [§ 11(b)], the voters of Missouri authorized the Morgan County R-II School District to adopt an operating tax levy of up to $2.75 per $100.00 of assessed valuation, without voter approval. Because [§ 11(b)] authorized the School District to adopt an operating tax levy of up to $2.75 without voter approval, the Plaintiffs are not entitled to the relief which they seek in their Petition. All claims set forth in the Petition are therefore ordered stricken and dismissed.
In reaching this conclusion, the circuit court necessarily resolved the controversy on its merits. It dismissed the petition, not because it did not aver facts that, if proven, stated a cause of action, but because § 11(b) "authorized the School District to adopt an operating tax levy of up to $2.75 without voter approval." Thus, in justifying the dismissal, the circuit court reached the merits of the issue and made what appears to be the declaration that it, in the same sentence, ruled that the taxpayers could not have. This is procedurally inconsistent and an improper basis for the dismissal of a declaratory judgment action. Wright v. Department of Corrections, 48 S.W.3d 662, 666-67 (Mo.App. 2001); Sandy v. Schriro, 39 S.W.3d 853, 856 (Mo.App. 2001).
In ruling on a motion to dismiss a declaratory judgment action for failure to state a claim, the circuit court is to address whether the party seeking relief has stated a claim upon which relief can be granted rather than the merits of the claim. Sandy, 39 S.W.3d at 856. The school district recognizes this but refers us to City of Creve Coeur v. Creve Coeur Fire Protection District, 355 S.W.2d 857, 859 (Mo. 1962), as creating an exception for those cases in which the outcome is "obvious beyond peradventure of doubt." Assuming this to be a correct interpretation of Creve Coeur, it would not apply in this case because the outcome of the taxpayers' claim was not undoubtedly obvious — certainly not in the face of seemingly conflicting constitutional provisions. As the Supreme Court said in Creve Coeur, "[I]t is not the function of the trial court on a motion to dismiss . . . to make an analysis of the law under which the rights are claimed or to construe the statutes in question or to determine on the merits whether plaintiff is entitled to the declaratory relief he seeks in accordance with the theory he states." Id. at 859-60; see also Nicolai v. City of St. Louis, 762 S.W.2d 423, 425 (Mo.banc 1988). The school district, however, raises several arguments in support of its contention that the taxpayers are not entitled to a declaratory judgment.
It first contends that it is entitled to sovereign immunity because the state has not specifically waived its immunity for declaratory judgment actions brought to enforce the provisions of § 22(a) after the taxes have already been paid. We disagree. The state need not waive its immunity for it has no immunity from actions seeking to enforce the provisions of § 22. Mo. Const. art. X, § 23; City of Hazelwood v. Peterson, 48 S.W.3d 36, 41 (Mo. banc 2001). Contrary to the school district's assertion, that the taxes have already been collected does not change this fact. Ring v. Metropolitan St. Louis Sewer District, 969 S.W.2d 716, 719 (Mo. banc 1998).
The school district next contends that the dismissal was proper because, to enforce the rights granted under § 22(a) in any proceeding other than § 139.031, a lawsuit must be brought before the taxes are due, and these taxpayers did not do that. The circuit court agreed and ruled that the taxpayers could not maintain their actions for declaratory judgments because the claims were not asserted before the taxes were due and payable.
A taxpayer's right to be free from unapproved tax increases can be accomplished two ways: an injunctive action before collection or timely action seeking a refund. Ring, 969 S.W.2d at 718-19. In Green v. Lebanon R-III School District, 13 S.W.3d 278 (Mo.banc 2000), taxpayers who had apparently not protested their taxes pursuant to § 139.031 sought refunds under § 137.073. Judge Wolff, in a concurring opinion, expressed concern over what constituted a "timely action" and concluded that refunds are not available under the statutory scheme if an action is not commenced before the taxes are due and payable — December 31. Because finality in taxation is critical to local governments, Judge Wolff feared that the finality in taxation would be threatened if no time limited the bringing of a refund action. Id. at 287-89 (Wolff, J., concurring). He concluded, "A timely challenge to the rate, even though not fully adjudicated before the end of the calendar year, would at least provide notice to the school districts and allow them to prepare for what could be an otherwise crushing financial blow." Id. at 289 (Wolff, J., concurring).
Since Green, this court has found Judge Wolff's concurring opinion persuasive and followed it as a correct declaration of the law in cases where taxpayers have sought declaratory relief and refunds in something other than a proper § 139.031 action. See Koehr v. Emmons, 55 S.W.3d 859 (Mo.App. 2001); Green v. Lebanon R-III School District, 87 S.W.3d 365 (Mo.App. 2002). Neither Green nor subsequent cases, however, have held that a declaratory judgment action brought in conjunction with a timely § 139.031 action must be commenced by December 31. Indeed, while the Koehr court directed the circuit court to dismiss all claims for declaratory relief and refunds of taxes brought on behalf of a class of taxpayers who filed suit on March 11, 1998, it allowed the individual claims of a taxpayer concerning 1997 taxes because, although not filed until after December 31, the action was timely in that it was brought within 90 days of having paid the taxes under protest as provided by § 139.031. 55 S.W.3d at 861-64.
We have found no case holding otherwise, and the school district does not direct us to any. Requiring taxpayers to file a declaratory judgment action by December 31, when we have already determined that the § 139.031 action on which the refund is based can be filed within 90 days after paying taxes under protest, would be absurd. Furthermore, the problems giving rise to Judge Wolff's concerns in Green are not present here. The school district did have notice and could prepare for potential financial blows should these taxpayers' protests be successful.
The school district's final contention is that, when constitutional amendments conflict, the later adopted provision should prevail. The district contends that, because amended § 11(b) was adopted after § 22, voter approval was not required to impose a levy of $2.75. We leave this matter for the circuit court to resolve on remand. The argument does not suggest that these taxpayers' petition should be dismissed because they are not entitled to a declaration at all. It suggests that these taxpayers are not entitled to a favorable declaration. Whether this argument is correct requires ascertainment of the merits of the taxpayers' claim, and, as we have already ruled, a motion to dismiss is not the opportunity to determine on the merits whether the taxpayers are entitled to the declaration they hope to receive. City of Creve Coeur, 355 S.W.2d at 859-60.
In their fourth point, the taxpayers argue that the circuit court erred in dismissing Count II of their petition in which they sought a declaratory judgment as to whether § 11(b) negated the rollback provisions of § 22(a) when valuation growth exceeds inflation growth. As it did in ruling on Count I, the circuit court dismissed the claim on the grounds that § 11(b) authorized the school district to impose a $2.75 levy without voter approval. This ruling is erroneous for the same reason that the circuit court's ruling concerning Count I was erroneous.
While we may render the declaration where the trial court fails to do so, Nicolai, 762 S.W.2d at 426, we decline to exercise our discretion to do so here because the legal arguments have not yet been fully developed or briefed by both parties. Without the benefit of those arguments, we refrain from rendering a declaration.
The taxpayers next argue that the circuit court erred in dismissing Count III of their petition in which they sought a declaratory judgment as to whether §§ 163.015.2 and 163.021.2 would result in the loss of state aid were the levy to be reduced below $2.75 if required by § 22. We disagree.
Although the circuit court's judgment did not specify the grounds on which it dismissed this count, we presume that it acted for one of the reasons stated in the school district's motion to dismiss. Johnson v. Vee Jay Cement, 77 S.W.3d 84, 88 (Mo.App.E.D. 2002). One of the arguments raised by the school district was that the taxpayers did not have standing to bring this particular declaratory judgment action.
Because justiciability is a necessary element of a declaratory judgment action and because standing is an element of justiciability, a party who lacks standing may not bring a declaratory judgment action. State ex rel. Nixon v. American Tobacco Company, 34 S.W.3d 122, 132 (Mo.banc 2000). To have standing to assert a declaratory judgment action, a plaintiff must have a legally protectable interest at stake. Blue Cross and Blue Shield of Missouri v. Nixon, 81 S.W.3d 546, 551 (Mo.App. 2002). A legally protectable interest is a pecuniary or personal interest that is directly in issue or jeopardy. Id. at 552.
The taxpayers assert that their direct legal interest is in "having the [s]chool [d]istrict levy lawful rates under the Hancock Amendment." They speculate that having the issue resolved would preclude further litigation because the school district would not refuse or resist reducing the levy because of its concerns with losing state aid and accreditation. In essence, they contend that, if the school district interests are resolved and future litigation avoided, their interests will be protected. Aside from being remote, this interest is indirect at best. An indirect personal interest does not satisfy the standing requirement. See State ex rel. Robinson v. Office of Attorney General, 87 S.W.3d 335, 339 (Mo.App.W.D. 2002).
In their final point, the taxpayers argue that the circuit court erred in dismissing Count V of their petition seeking attorney fees. Article X, § 23 of Missouri's constitution provides that, if a taxpayer's suit to enforce the provisions of § 22 is sustained, he "shall receive from the applicable unit of government his costs, including reasonable attorneys' fees incurred in maintaining such suit." The circuit court, however, determined that the allegations of the taxpayers' petition did not entitle them to recover attorney fees. Because the taxpayers' allegations were sufficient to reverse the circuit court's dismissal of their request for a tax refund and declaratory judgments as to the effect of §§ 11(b) and 22(a), we also reverse the dismissal of their request for attorney fees.
The school district argues that attorney fees are recoverable only for suits brought to "enforce" § 22 and that a taxpayer is entitled only to those fees in cases in which he has brought an injunctive action before collection of the taxes. The school district is mistaken. See City of Hazelwood v. Peterson, 48 S.W.3d 36, 41 (Mo.banc 2001) (affirming award of attorney fees in successful action for recovery of taxes paid under protest).
We find that Counts I, II, IV and V of the taxpayers' petition were sufficient to survive a motion to dismiss for failure to state a claim for which relief can be granted. We, therefore, reverse the circuit court's dismissal of those counts. We affirm the circuit court's dismissal of Count III. The cause is remanded for further proceedings consistent with this opinion.
Patricia A. Breckenridge, Judge, and Thomas H. Newton, Judge, concur.