In the
United States Court of Appeals
For the Seventh Circuit
No. 08-1497
S COTT A IR F ORCE B ASE P ROPERTIES, LLC,
a limited liability company,
Plaintiff-Appellant,
v.
C OUNTY OF S T. C LAIR, ILLINOIS,
a body corporate and politic,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 07-cv-00773—J. Phil Gilbert, Judge.
A RGUED S EPTEMBER 26, 2008—D ECIDED N OVEMBER 14, 2008
Before R IPPLE, M ANION, and S YKES, Circuit Judges.
M ANION, Circuit Judge. Scott Air Force Base Properties,
LLC (“the Company”), brought this action against the
County of St. Clair, Illinois (“the County”) seeking a
declaratory judgment that its leasehold interest in two
parcels of land located on the Scott Air Force Base is not
subject to the property tax which the County assessed. The
2 No. 08-1497
district court held that the Tax Injunction Act (“TIA” or
“the Act”), 28 U.S.C. § 1341, divested it of subject matter
jurisdiction and dismissed the case. The Company
has appealed. We affirm.
I. Background
The Military Housing Privatization Initiative (“MHPI”),
enacted in 1996 as part of the National Defense Authoriza-
tion Act, Pub. L. No. 104-106, § 2801, 110 Stat. 186, 544-51
(codified as amended at 10 U.S.C. §§ 2871-2885), is in-
tended to attract private investment and expertise to
build housing for members of the military and their
families. Developers submit competitive bids and the
federal government leases land to the successful bidder
to construct housing developments. This process pro-
vides necessary housing on military bases with no
capital cost to the government and at the same time
supplies the developer with reliable tenants with a
housing allowance to pay the rent.
The Company saw this as an attractive opportunity and
entered into a lease agreement with the United States
through the Secretary of the Air Force, agreeing to con-
struct, operate, and maintain rental housing units for
military personnel on land located on the Scott Air Force
Base for a term of fifty years. The government also exe-
cuted to the Company a quit claim deed to improve-
ments on the land and entered into a restrictive
covenant and use agreement with the Company.
While this appeared to be an attractive investment
opportunity for the Company, the County of St. Clair,
No. 08-1497 3
Illinois (where Scott Air Force Base is located) also saw
this as an attractive opportunity to obtain some tax reve-
nue. The County added the Company’s leasehold
interest in two parcels of the leased land to the County’s
tax assessment rolls and assessed an ad valorem tax 1 in
the amount of $15,681,300.00 on the Company’s interest
in each parcel for the 2007 tax year. In response, the
Company filed a complaint for declaratory judgment in
the United States District Court for the Southern District
of Illinois, asserting that the assessment was contrary to
various provisions of the United States Constitution,
federal statutory law, and Illinois law, and invoking the
district court’s subject matter jurisdiction under 28
U.S.C. § 1331. The Company sought a declaratory judg-
ment that its leasehold interest was not subject to the
County’s assessment and that all transactions entered
into under the MHPI were exempt from state taxation.
The County moved to dismiss for lack of subject matter
jurisdiction under Federal Rule of Civil Procedure 12(b)(1),
contending that the TIA removed the district court’s
jurisdiction to grant the declaratory relief the Company
had requested. In response to the County’s motion, the
Company argued that the Act’s jurisdictional bar did not
apply because the declaratory judgment sought by the
Company concerned a claim of preemption under fed-
eral law.
1
An ad valorem tax is “[a] tax imposed proportionally on the
value of something (esp. real property), rather than on its
quantity or some other measure.” B LACK ’S L AW D ICTIONARY 1469
(7th ed. 1999).
4 No. 08-1497
The district court granted the County’s motion to
dismiss. The court concluded that because a plain, speedy,
and efficient remedy was available to the Company in
the Illinois courts to challenge the County’s tax assess-
ment, the TIA divested it of jurisdiction to render
the declaratory relief which the Company sought.2 The
2
The County also claimed that inasmuch as the Company
had not yet applied for an exemption from Illinois state tax, no
actual controversy existed because the Company had not shown
it had suffered or would suffer an actual or imminent injury-in-
fact. The Company countered that it had suffered an injury-in-
fact and that an actual controversy between the parties arose
when the County added the leasehold interest in the two
parcels to its assessment rolls and assessed the parcels for
the 2007 tax year.
The district court did not address these arguments. However,
as an alternative to its primary holding on the effect of the
TIA, the court did hold that no actual controversy would exist
were it to interpret the MHPI apart from the tax assessment
because the Company would have no injury-in-fact and the
requested interpretation would be an advisory opinion. In so
holding, the district court apparently was responding to the
Company’s argument that it was not seeking to enjoin, suspend,
or restrain the County’s assessment, levy, and collection of the
ad valorem tax but rather was seeking a declaration that the
MHPI preempts the County’s authority to determine whether
it could assess, levy, or collect the tax. The court also con-
cluded that the Company lacked standing to seek a declaratory
judgment that the MHPI forbids the assessment of state
taxation because such a determination would not necessarily
redress the Company’s injury.
(continued...)
No. 08-1497 5
Company appeals.
II. Discussion
Our review of the district court’s dismissal of the case
for want of subject matter jurisdiction is de novo, and
we accept all facts stated in the complaint as true and
draw all reasonable inferences in the Company’s favor.
Newell Operating Co. v. Int’l Union of United Auto., Aerospace,
& Agric. Implement Workers of Am., 532 F.3d 583, 587
(7th Cir. 2008).
The Company asserts that the district court erred by
not addressing two threshold questions before reaching
the TIA: 1) whether the subject parcels were under the
exclusive legislative jurisdiction of the United States
pursuant to Article I, Section 8, Clause 17 of the Con-
stitution, and 2) if so, whether Congress authorized
state taxation of the land through the MHPI or the lease
agreement the parties entered in accordance with the
statute.
In support of its position, the Company cites Humble
Pipe Line Co. v. Waggonner, 376 U.S. 369 (1964), and Atlantic
Marine Corps Communities, LLC v. Onslow County, North
Carolina, 497 F. Supp. 2d 743 (E.D.N.C. 2007). Humble
Pipe Line was an appeal from the Supreme Court of Louisi-
2
(...continued)
Because we ultimately conclude that the TIA divested the
district court of jurisdiction to hear the case, we need not
address any of these issues.
6 No. 08-1497
ana where the Supreme Court of the United States con-
sidered “whether the United States has such exclusive
jurisdiction over a . . . tract of land . . . on which the
Barksdale Air Force Base is located that Louisiana is
without jurisdiction to levy an ad valorem tax on
privately owned property situated on the tract.” 376
U.S. at 370. However, the Court did not mention
the TIA—nor should it have—because the case was liti-
gated in the Louisiana state courts and never appeared
in a district court of the United States. While Humble
Pipe Line may or may not be of some utility to the
Company on the merits of its claims, it has no bearing
on the question of the district court’s jurisdiction in light
of the TIA.
In Atlantic Marine Corps, a company had entered into
a fifty-year ground lease of certain housing units located
on several Marine Corps installations pursuant to the
MHPI. 497 F. Supp. 2d at 748. The company sought a
declaratory judgment that these properties were under
the exclusive jurisdiction of the federal government
and thus not subject to ad valorem taxation by two coun-
ties. Id. at 745-46. The district court found that the prop-
erties were not subject to state taxation because they
were under the exclusive jurisdiction of the United
States which the government had not surrendered in
the MHPI. Id. at 758. Although Atlantic Marine Corps is
facially analogous to the instant matter, the Company’s
reliance upon it is misplaced.
First, the TIA was not mentioned in the Atlantic Marine
Corps opinion; therefore, the case does not directly
No. 08-1497 7
support the Company’s argument that threshold
questions must be reached before the Act comes into
play. Second, to the extent that Atlantic Marine Corps
may be read to suggest that the TIA has no operative
effect until constitutional or other federal issues per-
taining to the merits of a case are addressed, we reject
that view. Were district courts to declare that properties
assessed with state taxes are not subject to such taxes
due to the operation of the Constitution or other
federal law before reaching the jurisdictional question of
the TIA, the Act would be rendered nugatory. Such
declarations on the merits of cases would effectively
“restrain or suspend” state taxation procedures and
thereby diminish or encumber rightful state tax reve-
nue—which, as we discuss below, is exactly what the
TIA proscribes. Rather, because it potentially divests
the district courts of subject matter jurisdiction, the TIA
is itself a predicate consideration in the jurisdictional
determination.3 “The requirement that jurisdiction be
established as a threshold matter ‘spring[s] from the
nature and limits of the judicial power of the United States’
and is ‘inflexible and without exception.’ ” Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83, 94-95 (1998) (quoting
Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 382
(1884)). Indeed, “[i]t is axiomatic that a federal court
must assure itself that it possesses jurisdiction over the
3
And, as we discuss below, the application of the TIA turns on
the nature and effect of the relief sought when a plaintiff alleges
that a state tax is unlawful—not the source of law under which
the tax is challenged.
8 No. 08-1497
subject matter of an action before it can proceed to take
any action respecting the merits of the action.” Cook v.
Winfrey, 141 F.3d 322, 325 (7th Cir. 1998). For these
reasons, we find the Company’s “threshold questions”
argument unpersuasive.
We now consider the TIA, which provides 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. § 1341. The TIA
divests the district courts of subject matter jurisdiction
in “cases in which state taxpayers seek federal-court
orders enabling them to avoid paying state taxes.” Hibbs v.
Winn, 542 U.S. 88, 107 (2004). Put another way, if the
relief sought would diminish or encumber state tax
revenue, then the Act bars federal jurisdiction over
claims seeking such relief. Levy v. Pappas, 510 F.3d 755, 762
(7th Cir. 2007). The TIA strips the district courts of the
power to hear suits seeking not only injunctive but also
declaratory relief from state taxes. California v. Grace
Brethren Church, 457 U.S. 393, 411 (1982); RTC Commercial
Assets Trust 1995-NP3-1 v. Phoenix Bond & Indem. Co., 169
F.3d 448, 453 (7th Cir. 1999). In addition, the Act applies
to any state tax, including municipal and local taxes.
Hager v. City of W. Peoria, 84 F.3d 865, 868 n.1 (7th
Cir. 1996). Moreover, the TIA’s ambit is not confined by
the law under which a state tax is challenged, for even fed-
eral constitutional claims do not render the Act inap-
plicable. Schneider Transp., Inc. v. Cattanach, 657 F.2d 128,
No. 08-1497 9
131 (7th Cir. 1981).4
Of course, as its plain language indicates, the TIA’s
jurisdictional bar is conditioned upon the availability of a
“plain, speedy and efficient remedy” in state court. Grace
Brethren Church, 457 U.S. at 411. The “plain, speedy and
efficient remedy” requirement is construed narrowly.
Id. at 413. Accordingly, the Supreme Court has held
that this provision mandates only that “a state-court
remedy meet[ ] certain minimal procedural criteria.” 5
4
A few exceptions to the TIA’s general rule do exist. The
Supreme Court has held that the Act does not bar federal
jurisdiction when the United States sues to protect itself or one
of its instrumentalities from an unlawful state tax. Dep’t of
Employment v. United States, 385 U.S. 355, 358 (1966). It is
apparently still an open question whether an instrumentality of
the United States with power analogous to that of a government
department or regulatory agency may sue in its own right and
evade the Act’s jurisdictional bar without the joinder of the
United States in the action. See Arkansas v. Farm Credit Servs. of
Cent. Arkansas, 520 U.S. 821, 831 (1997). Because the United
States is not a co-plaintiff in this case and inasmuch as the
Company has not claimed that it is an instrumentality of the
federal government, we need not consider these exceptions
to the TIA.
5
A remedy is not “plain” if uncertainty regarding its nature
exists. Rosewell, 450 U.S. at 516-17 (quoting Tully v. Griffin, 429
U.S. 68, 76 (1976)). A remedy is not “efficient” if it “imposes . . .
unusual hardship . . . [or requires] ineffectual activity or an
unnecessary expenditure of time or energy.” Id. at 518. The
Supreme Court has held a state court refund process that takes
(continued...)
10 No. 08-1497
Rosewell v. LaSalle Nat’l Bank, 450 U.S. 503, 512 (1981).
However, the remedy must “provide[ ] 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 (quoting LaSalle Nat’l Bank v. County of Cook,
312 N.E.2d 252, 255-56 (Ill. 1974)); accord Hay v. Indiana
State Bd. of Tax Comm’rs, 312 F.3d 876, 880 (7th Cir. 2002).
A plaintiff who seeks to surmount the jurisdictional bar
of the TIA bears the burden of demonstrating the insuf-
ficiency of the remedy available in the state court system.
Amos v. Glynn County Bd. of Tax Assessors, 347 F.3d 1249,
1256 (11th Cir. 2003); Chase Manhattan Bank, N.A. v. City
& County of San Francisco, 121 F.3d 557, 559-60 (9th Cir.
1997); see Franchise Tax Bd. of California v. Alcan Aluminum
Ltd., 493 U.S. 331, 340-41 (1990); RTC Commercial Assets
Trust, 169 F.3d at 453-54.
To determine whether the TIA applies, we first need to
examine the kind of relief that the Company sought in
its complaint. See Levy, 510 F.3d at 761-62. In its prayer
for relief, the Company asked the district court to
“declare [that] the leasehold interest of the Plaintiff is
not subject to state taxation” and to “declare [that] all
transactions entered into under the [MHPI] are exempt
from state taxation[.]” Granting such declaratory relief
would doubtless “suspend or restrain the assessment,
levy or collection” of the County’s ad valorem tax and
5
(...continued)
two years to pursue satisfies the speedy remedy requirement.
Id. at 520.
No. 08-1497 11
would reduce the flow of state tax revenue or tie up
rightful tax revenue. Id. at 762. Therefore, because the
Company was, at bottom, a “state taxpayer[ ] seek[ing] [a]
federal-court order[ ] enabling [it] to avoid paying
state taxes,” the Act divested the district court of subject
matter jurisdiction unless a plain, speedy, and efficient
remedy was unavailable in the Illinois court system.
Hibbs, 542 U.S. at 107.
We turn then to the type of remedy available to the
Company under Illinois law. The Company does not
claim that the Illinois remedy is not plain or speedy.
However, the Company does contend that the Illinois
remedy is not efficient because it must concurrently
pursue two separate administrative avenues in chal-
lenging the County’s assessment—the exemption ap-
plication 6 and the valuation protest.7,8 In support of its
6
Under the Illinois Property Tax Code, a taxpayer who has
been assessed on property which he believes to be tax-exempt
can apply for an exemption with a local board of review. 35 ILCS
200/16-70. The taxpayer is afforded an opportunity to be
heard before the board. Id. After the board of review conducts
a hearing and forwards a statement of facts to the Department
of Revenue, the Department decides whether the property is
subject to taxation and informs the board of its decision. Id. The
taxpayer can then seek review of the decision at a hearing
before the Department. Id. at 8-35. After the hearing, the
Department will render a decision and the taxpayer (if still
aggrieved) can petition the Director of the Department of
Revenue for a rehearing. Id. Once a final administrative deci-
(continued...)
12 No. 08-1497
position, the Company cites Georgia R.R. & Banking Co. v.
Redwine, 342 U.S. 299 (1952), for the proposition that a
6
(...continued)
sion is issued, the taxpayer may seek review in the circuit court
for the county in which the property is situated. Id. at 8-40. With
exceptions not relevant here, the circuit court has original
jurisdiction of all justiciable matters. I LL . C ONST . art. 6, § 9. An
appeal from the circuit court may be taken to the Illinois
appellate courts. 35 ILCS 200/8-40; 705 ILCS 25/8.1, 8.2.
7
The Illinois Property Tax Code also permits a taxpayer to file
a written complaint challenging the assessed valuation of
property with the local board of review. 35 ILCS 200/16-55. After
the tax is paid under protest, an appeal of the board’s decision
can be taken directly to the circuit court in which the property
is located by filing a tax objection complaint. Id. at 23-5; 23-10;
23-15; 16-160. The circuit court will then hear all of the tax-
payer’s objections to the assessment in question. Id. at 23-15.
An appeal from the circuit court may be taken to the Illinois
appellate courts. 705 ILCS 25/8.1, 8.2.
8
The Company also claims that because under Illinois law a
lien securing payment of the taxes became enforceable when
the assessments were made, a cloud now rests upon the title
to the land which is only removable by multiple proceedings.
However, the Company does not indicate what type of proceed-
ings (if indeed they are different from the valuation and
exemption ones) would be required to remove such a cloud on
title and cites no law in support of such contention. Inasmuch
as the Company did not advance this argument in the
district court and has failed to sufficiently develop it on
appeal, it is waived. Hojnacki v. Klein-Acosta, 285 F.3d 544,
549 (7th Cir. 2002).
No. 08-1497 13
state court remedy is inefficient when it would require
a multiplicity of suits. However, the Company’s reliance
on this case is misplaced. In Redwine, the Supreme Court
held that a remedy which would have required the tax-
payer to file over 300 claims in fourteen counties in
order to assert its lone constitutional claim was not effi-
cient. 342 U.S. at 303. The Court also found inefficient
a suit-for-refund remedy that allowed the taxpayer
to challenge the actions of only one of four taxing au-
thorities. Id. at 301, 303. By contrast, the matter before us
potentially implicates only two separate proceedings—a
far cry from the onerousness and inefficiency inherent
in pursuing 300 claims in Redwine. In addition, unlike
the remedy in Redwine, the Illinois remedy allows the
Company to challenge the actions of every taxing
authority (in this case, only the County) which has
made an assessment. More importantly, unlike the tax-
payer in Redwine, the Company has not shown that it
would have to litigate the same claims in the valua-
tion proceeding as in the exemption one.
While it may be true that a remedy that would allow
the Company to assert its exemption and valuation chal-
lenges to the County’s tax assessment in one pro-
ceeding would be a relatively more efficient course, the
TIA is not so exacting that it requires a state remedy to
be the best one conceivable. Miller v. Bauer, 517 F.2d 27,
32 (7th Cir. 1975); cf. Rosewell, 450 U.S. at 520 (explaining
that “[n]owhere in the Tax Injunction Act did Congress
suggest that the remedy must be the speediest”). Because
the Company has not shown that the Illinois remedy
“imposes . . . unusual hardship . . . [or requires] ineffectual
14 No. 08-1497
activity or an unnecessary expenditure of time or en-
ergy[,]” we cannot say that it is not efficient. Rosewell,
450 U.S. at 518.
In addition, we conclude—as did the district court—that
the Company would receive a full hearing and judicial
determination of its constitutional claims in the Illinois
system as set forth in the Illinois Property Tax Code.9
Rosewell, 450 U.S. at 514. Indeed, Illinois case law clearly
indicates that Illinois taxpayers are able to litigate
their constitutional and other federal-law challenges to
state tax matters in the Illinois administrative and judicial
system. See, e.g., McLean v. Dep’t of Revenue, 704 N.E.2d
352, 356, 359 (Ill. 1998); Rockford Life Ins. Co. v. Dep’t of
Revenue, 492 N.E.2d 1278, 1279-83 (Ill. 1986); LaSalle Nat’l
Bank v. County of Cook, 312 N.E.2d 252, 255-56 (Ill. 1974);
Ford Motor Co. v. Korzen, 196 N.E.2d 656, 661 (Ill. 1964);
Price Flavoring Extract Co. v. Lindheimer, 14 N.E.2d 476, 477-
78 (Ill. 1938); Home Interiors & Gifts, Inc. v. Dep’t of
Revenue, 741 N.E.2d 998, 1001-03 (Ill. App. Ct. 2001);
Montgomery Ward Life Ins. Co. v. Dep’t of Local Gov’t
Affairs, 411 N.E.2d 973, 976, 980 (Ill. App. Ct. 1980).
The Company lastly contends that even if the TIA is
implicated, “[w]here, as here, a case presents ‘facially
conclusive claims of federal preemption,’ a federal court
need not abstain and may decide the preemption ques-
tion.” In support of its position, the Company cites New
Orleans Pub. Serv., Inc. v. Council of the City of New
Orleans, 491 U.S. 350 (1989), United States v. Commonwealth
9
See supra notes 6-7.
No. 08-1497 15
of Kentucky, 252 F.3d 816 (6th Cir. 2001), and Bunning v.
Commonwealth, 42 F.3d 1008 (6th Cir. 1994). These cases
are inapposite because all address abstention or preemp-
tion doctrines and none involve the TIA. Moreover,
when the Act applies, a district court is without
subject matter jurisdiction and thus can make no
further judicial determination. Put another way,
“ ‘[w]ithout jurisdiction the court cannot proceed at all
in any cause. Jurisdiction is power to declare the law,
and when it ceases to exist, the only function
remaining to the court is that of announcing the fact
and dismissing the cause.’ ” Steel Co., 523 U.S. at 94 (quot-
ing Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514 (1868)).
This is precisely what the district court did, and
we approve of that decision.
III. Conclusion
Because a plain, speedy, and efficient remedy was
available to the Company in the Illinois courts, the TIA
divested the district court of subject matter jurisdiction
over the Company’s complaint. Accordingly, the
district court’s dismissal of the action for want of juris-
diction is hereby A FFIRMED.
11-14-08