Opinion
A19-1877 A19-1878
07-13-2020
Walmart Inc., Appellant, v. Winona County, Respondent, Martin County, Respondent.
Edward F. Fox, Jeffrey R. Peters, Bassford Remele, P.A., Minneapolis, Minnesota; and Robert A. Hill, Robert Hill Law, Ltd., Wayzata, Minnesota (for appellant) Marc J. Manderscheid, Andrew M. Carlson, Taft Stettinius & Hollister LLP, Minneapolis, Minnesota (for respondents Winona County and Martin County); and Karin Sonneman, Winona County Attorney, Paul Ellison, Assistant County Attorney, Winona, Minnesota (for respondent Winona County); and Terry W. Viesselman, Martin County Attorney, Fairmont, Minnesota (for respondent Martin County) Erick G. Kaardal, Mohrman, Kaardal & Erickson, P.A., Minneapolis, Minnesota (for amicus curiae USA Property Tax Associates and Alliance Property Consultants, Inc.) Anthony C. Palumbo, Anoka County Attorney, Jason J. Stover, Assistant County Attorney, Anoka, Minnesota; and Peter Orput, Washington County Attorney, James C. Zuleger, Assistant County Attorney, Stillwater, Minnesota; and James C. Backstrom, Dakota County Attorney, Suzanne W. Schrader, Assistant County Attorney, Hastings, Minnesota; and Michael O. Freeman, Hennepin County Attorney, Sara Bruggeman, Assistant County Attorney, Minneapolis, Minnesota (for amicus Minnesota County Attorneys Association)
This opinion will be unpublished and may not be cited except as provided by Minn . Stat. § 480A.08, subd. 3 (2018). Affirmed
Bratvold, Judge Winona County District Court
File No. 85-CV-19-1037 Edward F. Fox, Jeffrey R. Peters, Bassford Remele, P.A., Minneapolis, Minnesota; and Robert A. Hill, Robert Hill Law, Ltd., Wayzata, Minnesota (for appellant) Marc J. Manderscheid, Andrew M. Carlson, Taft Stettinius & Hollister LLP, Minneapolis, Minnesota (for respondents Winona County and Martin County); and Karin Sonneman, Winona County Attorney, Paul Ellison, Assistant County Attorney, Winona, Minnesota (for respondent Winona County); and Terry W. Viesselman, Martin County Attorney, Fairmont, Minnesota (for respondent Martin County) Erick G. Kaardal, Mohrman, Kaardal & Erickson, P.A., Minneapolis, Minnesota (for amicus curiae USA Property Tax Associates and Alliance Property Consultants, Inc.) Anthony C. Palumbo, Anoka County Attorney, Jason J. Stover, Assistant County Attorney, Anoka, Minnesota; and Peter Orput, Washington County Attorney, James C. Zuleger, Assistant County Attorney, Stillwater, Minnesota; and James C. Backstrom, Dakota County Attorney, Suzanne W. Schrader, Assistant County Attorney, Hastings, Minnesota; and Michael O. Freeman, Hennepin County Attorney, Sara Bruggeman, Assistant County Attorney, Minneapolis, Minnesota (for amicus Minnesota County Attorneys Association) Considered and decided by Ross, Presiding Judge; Bratvold Judge; and Slieter, Judge.
UNPUBLISHED OPINION
BRATVOLD, Judge
In these consolidated appeals, appellant Walmart Inc. (Walmart) challenges decisions from Winona County District Court and Martin County District Court (collectively, the district courts) dismissing Walmart's complaints with prejudice for failure to state a claim upon which relief can be granted under Minn. R. Civ. P. 12.02(e). Walmart describes its complaints as alleging that its "Big-Box stores in each of those [c]ounties had been intentionally overvalued and unequally assessed to extract excessive real estate taxes" in violation of the United States and Minnesota Constitutions. On appeal, Walmart argues that the district court decisions must be reversed because they erroneously determined that Minn. Stat. §§ 278.01-.14 (2018) (chapter 278) is "the exclusive remedy" for property-tax-assessment claims, which Walmart insists overstates precedent. Walmart maintains that its complaints allege constitutional violations that cannot be "preempt[ed]" by chapter 278, that its claims are not barred by the one-year limitations period in chapter 278, and that the district courts misapplied the rule 12 standard. Walmart also contends its complaints adequately plead a claim for relief under 42 U.S.C. §§ 1983, 1988 (2012). Respondents Winona County and Martin County (collectively, the counties) disagree and ask us to affirm.
We determine that Walmart's claims, as pleaded in the complaints, are covered by chapter 278 and therefore time-barred by the statute of limitations, Minn. Stat. § 278.01, subd. 1(c). While the district courts' memoranda may have overstated precedent about the exclusivity of chapter 278, and an independent constitutional violation may be cognizable, we need not decide that issue because Walmart's complaints fail to state a claim for constitutional violations. Because we also conclude that Walmart's complaints fail to state a claim under sections 1983 and 1988, we affirm.
FACTS
Walmart seeks relief from property-tax assessments for two Walmart Supercenters, one in Fairmont (Martin County) and the other in Winona (Winona County). In separate actions not involved in this appeal, Walmart in April 2019 timely filed "Chapter 278" petitions challenging the 2018 assessments on its properties in both counties. In the complaints at issue in this appeal, filed in May 2019, Walmart challenged the assessments on its properties in both counties from January 2, 2013, through January 2, 2018, and demanded a jury trial. Both complaints assert the same two claims: first, a claim for unequal assessments (count one); and, second, a violation of 42 U.S.C. §§ 1983, 1988 (count two).
In count three, both complaints request injunctive relief to enjoin transfer to the Minnesota Tax Court. Both district courts determined that count three was moot because they dismissed the other two counts for failure to state a claim. Walmart does not separately challenge the district courts' mootness determinations in this appeal. Thus, we do not discuss count three.
The complaints have almost identical factual allegations. Both complaints allege that the county assessors "placed a market value" on Walmart's real property "in an amount which unconstitutionally violates the Fourteenth Amendment's Equal Protection Clause and the Uniformity Clause of the Minnesota Constitution by imposing a disproportionate and discriminatory tax burden" as compared to similarly-situated (a) state taxpayers; (b) county taxpayers; (c) "actual sale prices paid and tax assessments made for similar real property" in the county; (d) "actual sale prices paid and tax assessments for similar real property" in the state; and (e) "actual sale prices paid for similar real property" in the United States "for Big Box stores."
Both complaints include an "Unequal Assessment and Lack of Uniformity Chart" for each property that, according to the allegations, "demonstrates the gross disparity between [the counties'] 2013 through 2018 assessments of [Walmart's] Real Property and the actual market sales and assessments of similar real property" in each county "and throughout Minnesota and elsewhere."
Both complaints quote Minn. Stat. § 273.12 (2018), and allege that real property assessments in every county "are the product of the statutory duty" of the county assessor to "give due weight to lands which are comparable . . . to the end that all lands similarly located and improved will be assessed upon a uniform basis and without discrimination." Both complaints also allege that Minnesota law requires all real property be assessed based on its "market value," citing Minn. Stat. § 273.11, subd. 1 (2018), and that caselaw provides that county assessors must rely "on market sales of comparable real property when performing" their duties.
Both complaints then allege that "[d]espite a clear statutory duty and controlling [caselaw]," the counties "willfully, intentionally, and unlawfully refused to consider and give due weight," in the case of Martin County, "to a sale of the Fairmont Kmart store in 2015 comparable in character, quality, and location," and, in the case of Winona County, to "multiple sales and valuations of similarly situated, comparable properties." Both complaints allege that the county assessors "fail[ed] to abide by the statutory duty and statutory requirement" to "rely on sales of comparable real property" in administering 2013-2018 tax assessments of Walmart's real properties, and this "constitutes an intentional and willful failure and refusal by [the counties] to apply and employ the legally mandated standard" to assess Walmart's real properties.
As a result, both complaints allege that the counties assessed Walmart's real properties during the 2013 through 2018 period "at an estimated market value" in excess of the average sales price "paid or assessment for" big-box stores in Minnesota. In the case of Martin County, Walmart alleges the assessment was "between 250% to 300% more" than the average sales price of Minnesota big-box stores. The Martin County complaint also alleges that the county's "intentional and willful failure to fulfill its statutory duty to rely on sales comparisons between like real properties in order to assess them 'upon a uniform basis' for property taxes" caused the county to impose a tax burden on Walmart that is "2.5 to 22 times the sums assessed" against "the neighboring Kmart Big Box store." In the case of Winona County, Walmart similarly alleges the counties "intentional and willful failure to perform" its duties caused the county to impose a tax burden "more than twice" the average sales price or assessment of Minnesota big-box stores.
Both complaints also allege that the counties have been notified of "the grossly disproportionate assessments" and Walmart has "requested and demanded" that the counties repay "all amounts overpaid," but the counties have "failed and refused to base [Walmart's] assessment on the applicable statutory requirements," so that Walmart has "suffered damages in excess of $50,000, the precise amount of which shall be established at jury trial of this matter."
In count one, Walmart alleges that the valuations and assessments of its properties by both county assessors from 2013 through 2018 "intentionally and systematically discriminated against" Walmart's real properties "as compared to similarly situated properties of the same class in the same taxing district" in violation of the federal Equal Protection Clause and the state Uniformity Clause. In count two, Walmart claims it will "incur costs and damages recoverable" against the counties under 42 U.S.C. §§ 1983, 1988 "to vindicate [Walmart's] constitutional rights."
For remedies, both complaints request declarations that Walmart's properties have been "subjected to unequal and discriminatory assessments" that violate the state and federal constitutions and Minnesota chapter 273. Walmart also requests a determination of "the real or actual market value" of its real properties from January 2, 2013, through January 2, 2018; a reduction in the "market value" of its real properties "for the affected assessment years"; and a direction to the counties to "correct the tax lists and assessment rolls," "issue corrected tax statements," and "refund[] . . . tax overpayments . . . with interest, as required by law." Finally, the complaints request money judgments for Walmart's overpayment of taxes for 2013-2018, as well as for costs and attorney fees under 42 U.S.C. §§ 1983, 1988.
The counties moved to dismiss Walmart's complaints for failure to state a claim upon which relief can be granted under Minn. R. Civ. P. 12.02(e). After a hearing, the district courts took the motions under advisement and later granted the motions to dismiss with prejudice in written orders. The district courts' memoranda follow similar reasoning and determine that (a) Minnesota caselaw establishes that chapter 278 provides the exclusive remedy for unequal-assessment claims; (b) Walmart's constitutional claims are for unequal assessment and were untimely filed under chapter 278's statute of limitations; and (c) Walmart's claims under sections 1983 and 1988 are precluded because chapter 278 provides an "adequate legal remedy."
Walmart appeals.
DECISION
I. The district courts properly dismissed Walmart's complaints for failing to state a claim under Minn. R. Civ. P. 12.02(e).
When a case is dismissed for failure to state a claim, we review de novo whether the complaint sets forth a legally sufficient claim for relief. DeRosa v. McKenzie, 936 N.W.2d 342, 346 (Minn. 2019). "We accept the facts alleged in the complaint as true and construe all reasonable inferences in favor of the nonmoving party." Walsh v. U.S. Bank, N.A, 851 N.W.2d 598, 606 (Minn. 2014).
"Minnesota is a notice-pleading state and does not require absolute specificity in pleading, but rather requires only information sufficient to fairly notify the opposing party of the claim against it." Id. at 604-05 (quotation omitted). Legal conclusions in a complaint do not bind appellate courts; "plaintiff[s] must provide more than mere labels and conclusions." Graphic Commc'ns Local 1B Health & Welfare Fund A v. CVS Caremark Corp., 850 N.W.2d 682, 692 (Minn. 2014). We review de novo a district court's statutory and constitutional interpretation and its application of the law. Cocchiarella v. Driggs, 884 N.W.2d 621, 624 (Minn. 2016) (statutes); Cruz-Guzman v. State, 916 N.W.2d 1, 7 (Minn. 2018) (constitution); Harlow v. State, Dep't of Human Servs., 883 N.W.2d 561, 568 (Minn. 2016) (application of law).
Walmart's complaints fail to state a claim for four reasons. First, Walmart's "Constitutional Complaints" assert that it paid property taxes based on unequal assessments for two real properties from 2013-2018. The complaints, therefore, allege unequal assessments that are covered by Minn. Stat. § 278.01, subd. 1(a), but the chapter 278 claims are untimely under the one-year statute of limitations. Second, the Minnesota Supreme Court has recognized the possibility of a constitutional claim that is independent of chapter 278. Third, we need not determine whether the law permits a claim independent of chapter 278 because Walmart's complaints fail to state a claim for disparate treatment. Fourth, Walmart's complaints fail to state a claim under sections 1983 and 1988. We address each reason in turn.
A. Walmart's complaints assert untimely unequal-assessment claims covered by chapter 278.
County taxing authorities conduct annual assessments of real property throughout Minnesota to determine annual property taxes. See Minn. Stat. §§ 273.01, .17 (2018). The Minnesota Supreme Court has defined property assessment and described the assessment process as it relates to property taxes.
See also Minn. Stat. §§ 273.032 (market value definition), .05 (assessors), .062 (valuation and assessment of personal property), .11 (valuation of property), .1102 (rate of tax), .12 (assessment of real property), .121 (valuation of real property), .13 (classification of property), .1393 (computation of net property taxes) .17 (assessment of real property), .26 (personal property) (2018).
To assess property is to fix its value for the purpose of taxation. The assessed valuation of property is that value upon each unit of which a prescribed amount must be paid as taxes in the future; it is a factor which, together with the tax rate fixed by the taxing agencies of government, is used to determine the amount of taxes to be charged against specific property.Swanson v. Minn. Tax Comm'n, 287 N.W. 317, 322-23 (Minn. 1939) (citations omitted). When "estimating and determining the value of lands for the purpose of taxation," county assessors have a duty "to consider and give due weight to lands which are comparable in character, quality, and location, to the end that all lands similarly located and improved will be assessed upon a uniform basis and without discrimination." Minn. Stat. § 273.12. Property assessments are based on a property's "market value," Minn. Stat. § 273.11, subd. 1, and used to compute the property tax charged to each property within a taxing district or county.
Under Minn. Stat. § 278.01, taxpayers may challenge an assessment they believe to be erroneous or unfair by petitioning for review and asserting a challenge based on any of these claims: (1) unequal assessment, (2) overvaluation, (3) illegal levy, (4) the tax has already been paid, and (5) the property is exempt. Minn. Stat. § 278.01, subd. 1(a). Petitioning taxpayers may pursue their claims in either the district court of the county levying the tax or in the Minnesota Tax Court. Id. With this understanding of chapter 278 in mind, we consider Walmart's complaints.
We agree with the Winona County District Court that Walmart pleads claims that fall within the five claims covered by chapter 278 because the claims "boil down to the assertion that its land was unequally assessed resulting in it [being] overvalued." Count one of Walmart's complaints allege that from 2013 through 2018 the county assessors'
valuations and assessments of [Walmart's] Real Property intentionally and systematically discriminated against [Walmart's] Real Property as compared to similarly situated properties of the same class in the same taxing district, resulting in prohibited unequal assessments . . . . These disparities and discriminatory, unequal assessments are the result of valuing [Walmart's] Real Property at substantially more than its actual, fair market value or, in the alternative, valuing similar properties at substantially less than their actual, fair market value.Because Walmart's complaints assert that the counties unequally assessed its properties based on erroneous valuations by county assessors, it asserts a claim covered by Minn. Stat. § 278.01. See In re Objection to Real Prop. Taxes, 353 N.W.2d 525, 529-31 (Minn. 1984) (stating unequal assessment occurs when similar properties are valued at less than market value in comparison to the complaining taxpayer's property); see also Weyerhaeuser Co. v. County of Ramsey, 461 N.W.2d 922, 924 (Minn. 1990) (explaining that showing overvaluation is one step in proving unequal assessment under Minn. Stat. § 278.01); United Nat'l Corp. v. Hennepin County, 299 N.W.2d 73, 75 (Minn. 1980) ("To determine whether a property has been unequally assessed, its actual market value and real estate tax assessment must be compared with the market value and real estate tax assessments of other properties.").
Several observations about Walmart's complaints support the conclusion that Walmart's claims fall under chapter 278. First, Walmart's reliance on chapter 278 throughout both complaints undermines its argument on appeal that its constitutional claims arise independently from chapter 278. Second, Walmart titled count one in each complaint, "Unequal Assessments," followed by "Violation of Equal Protection Rights" and "Violation of Uniformity Clause." Third, Walmart's complaints seek relief by way of a court order directing the counties to correct the tax list and assessment rolls to reflect their properties' market value, citing Minn. Stat. § 278.09, and seek corrected tax statements reflecting the change in assessment.
Taking these observations together, Walmart is challenging how county assessors determined the market value before assessing its properties, therefore, we conclude that Walmart's complaints challenge the assessment process. Our analysis on this point is similar to the Minnesota Supreme Court's analysis of a taxpayer challenge to the application of classification rates in Programmed Land, Inc. v. O'Connor. 633 N.W.2d 517, 523, 526 (Minn. 2001) (explaining "assessment is the process by which taxable value is ascertained, and that process includes the determination of market value, classification and the application of class rates"). Thus, count one of Walmart's complaints pleads an unequal-assessment claim that is covered by chapter 278.
A chapter 278 petition must be filed no later than April 30 "of the year in which the tax becomes payable." See Minn. Stat. § 278.01, subds. 1(a), (c) (providing that taxpayers "must file" chapter 278 petitions "on or before April 30"); see State v. Elam, 84 N.W.2d 227, 228 (Minn. 1957) (holding that petition not filed before statutory deadline is time-barred by chapter 278's statute of limitations). While, in separate chapter 278 petitions, Walmart has asserted timely chapter 278 challenges for both properties for the 2018 assessment, those petitions are not before us. Rather, the complaints before this court were filed in May 2019 and challenge assessments beginning in 2013.
We therefore agree with the district courts' conclusions that, if we deem Walmart's complaints to raise claims only under chapter 278, the claims are untimely. See In re Individual 35W Bridge Litig., 806 N.W.2d 820, 831 (Minn. 2011) ("[A] statute of limitations limits the time within which a party can pursue a remedy." (quotation omitted)). A motion to dismiss is proper "when it is clear and unequivocal from the face of the complaint that the statute of limitations has run on all the claims asserted." Jacobson v. Bd. of Tr. of the Teachers Ret. Ass'n, 627 N.W.2d 106, 109 (Minn. App. 2001), review denied (Minn. Aug. 15, 2001). Here, it is clear from the face of Walmart's complaints that the statute of limitations has run for any claim covered by Minn. Stat. § 278.01, subd. 1(c).
Walmart does not dispute that its complaints are untimely under the one-year statute of limitations for chapter 278 challenges, nor does it argue that Minn. Stat. § 278.01's limitations period is facially unconstitutional. Rather, Walmart argues that the one-year deadline does not apply to its complaints because it has asserted a constitutional challenge outside chapter 278. Thus, we next consider whether Walmart's complaints state a viable constitutional challenge independent of chapter 278.
B. Existing Minnesota law has recognized the possibility of a taxpayer's constitutional challenge outside chapter 278.
Walmart argues that "Chapter 278 does not preempt Walmart's federal and state constitutional rights to equal protection and uniformity in taxation." Walmart also argues that it has "validly pled claims for violations of its constitutional protections under the applicable standard of 'intentional, arbitrary or systematic' governmental action." Walmart asserts that Minnesota caselaw has "left open the question of a constitutional claim" that alleges "'intentional, arbitrary, or systematic'" discrimination, and thus may independently "challenge an improper assessment" apart from chapter 278. And Walmart urges that its complaints "plainly satisfy" the minimal rule 12 standard.
The counties argue that chapter 278 is "the exclusive remedy for challenging an assessment" and there is "no difference" between a statutory claim and a constitutional claim. They argue that recent supreme court caselaw rejected an attempt—like Walmart's complaints—to "do an end-run around the process established in Minnesota law under Chapter 278 for challenging property tax assessments."
Both parties have legal support for some aspects of their positions.
Walmart is correct that unequal-assessment claims are grounded in the constitution. See U.S. Const. amend. XIV, § 1 ("No State shall . . . deny to any person within its jurisdiction the equal protection of the laws."); Minn. Const. art. X, § 1 ("Taxes shall be uniform upon the same class of subjects and shall be levied and collected for public purposes."). As our supreme court has explained: "[D]iscrimination in the imposition of the tax burden, resulting from systematic, arbitrary, or intentional undervaluation of some property as compared to the valuation of other property in the same class, violates the Uniformity Clause of Minn. Const. art. 9, § 1, and the equal-protection clause of U.S. Const. Amend. XIV." Hamm v. State, 95 N.W.2d 649, 654-55 (Minn. 1959); see also In re Objection to Real Prop. Taxes, 353 N.W.2d at 529 ("A claim of unequal assessment may arise under the equal-protection clause of the United States Constitution, amendment XIV, the uniformity clause of the Minnesota Constitution, art. X, § 1" and under chapter 278). Thus, Minnesotans are constitutionally protected from unequal assessments and the resulting discriminatory taxation. Hamm, 95 N.W.2d at 654-55.
And the counties are correct that Minnesota courts have long held that chapter 278 is the "exclusive means" for challenging unequal-assessment claims in court. See Odunlade v. City of Minneapolis, 823 N.W.2d 638, 644 (Minn. 2012) (stating chapter 278 "provide[s] the exclusive means by which a taxpayer may attack" an unequal assessment (quotation omitted)); Programmed Land, 633 N.W.2d at 523 ("[W]e [have] held that chapter 278 provides the exclusive means to bring an action in court to challenge an assessment, one of the five listed types of challenges" in section 278.01.); Faith Evangelical Free Church v. County of Hennepin, 246 N.W.2d 439, 442 (Minn. 1976) (holding chapter 278 is the "exclusive remedy" for assessment challenges); State v. Elam, 84 N.W.2d 227, 232 (1957) (holding chapter 278 is the "exclusive remedy by which [] taxpayers" may challenge property-tax assessments).
The Minnesota Supreme Court in Programmed Land, however, appears to have clarified this ample precedent, as Walmart contends. In response to the argument that "any objection to property taxes may be raised under section 278.01," the supreme court stated that it had "not construed" chapter 278 "that broadly." 633 N.W.2d at 523. Programmed Land also stated that its precedent had "not conclude[d] that chapter 278 provides the exclusive judicial means to make all property tax challenges." Id. (emphasis added). Thus, Programmed Land suggests that it is possible that a property-tax challenge may arise outside chapter 278.
Still, the supreme court has not decided whether a taxpayer may bring an independent constitutional challenge to property-tax assessments. Programmed Land stated, "We do not reach the issue of whether [taxpayers] may proceed independently" of chapter 278 under the Equal Protection or Uniformity Clauses. Id. at 530. And Odunlade stated, "We need not, and do not, decide whether chapter 278 precludes relators' constitutional claims." 823 N.W.2d at 647. In both decisions, the supreme court declined to reach this issue because it determined that the taxpayers' claims failed "as a matter of law." Id. (rejecting disparate treatment claim); see also Programmed Land, 633 N.W.2d at 530 (declining to decide whether taxpayer had an independent constitutional claim because the taxpayer's disparate treatment claim failed "as a matter of law").
We repeat that our supreme court has "not conclud[ed] that chapter 278 provides the exclusive judicial means to make all property tax challenges." Programmed Land, 633 N.W.2d at 523 (emphasis added). And, like the supreme court in Programmed Land and Odunlade, we need not decide whether Walmart may bring a constitutional challenge outside chapter 278 because we determine that Walmart has failed to state a constitutional claim in its complaints.
Judicial restraint on this issue is appropriate. We are an error-correcting court and recognize that it is not the province of the court of appeals either to make "a dramatic change in the interpretation of the Minnesota Constitution," or to establish a new cause of action for the very first time. Minn. State Patrol Troopers Ass'n ex rel. Pince v. State, Dep't of Pub. Safety, 437 N.W.2d 670, 676 (Minn. App. 1989) (quotation omitted) (stating this court often will decline to implement a new constitutional interpretation before the supreme court adopts the interpretation), review denied (Minn. May 24, 1989); see also LaChapelle v. Mitten, 607 N.W.2d 151, 159 (Minn. App. 2000) (stating this court is limited to "correcting errors" and does not "create public policy"), review denied (Minn. May 16, 2000); Stubbs v. N. Mem'l Med. Ctr., 448 N.W.2d 78, 83 (Minn. App. 1989) (declining to establish new cause of action), review denied (Minn. Jan. 12, 1990); Tereault v. Palmer, 413 N.W.2d 283, 286 (Minn. App. 1987) ("[T]he task of extending existing law falls to the supreme court or the legislature, but it does not fall to this court."), review denied (Minn. Dec. 18, 1987).
C. Walmart fails to state a constitutional claim for disparate treatment.
"Equal protection claims and claims for violation of the [U]niformity [C]lause under the Minnesota Constitution are analyzed using similar principles." Odunlade, 823 N.W.2d at 647; Schober v. Comm'r of Revenue, 778 N.W.2d 289, 293 (Minn. 2010) (explaining that "identical" protection is offered by the federal Equal Protection Clause and the Minnesota Uniformity Clause). There are two types of equal-protection claims: "disparate impact" and "disparate treatment." Odunlade, 823 N.W.2d at 647 (citing Washington v. Davis, 426 U.S. 229, 239, 96 S. Ct. 2040, 2048 (1976)). Walmart does not allege that disparate impact applies. See Odunlade, 823 N.W.2d at 648 (explaining disparate impact claimants must show state action intentionally impacted a suspect class more than others). Indeed, Walmart's brief to this court asserts it is "plainly alleging [] disparate treatment."
The "threshold question" for stating a disparate treatment claim is "whether the claimant is treated differently from others who are similarly situated, because the [E]qual [P]rotection [C]lause does not require the state to treat differently situated people the same." Odunlade, 823 N.W.2d at 647. But alleging disparate treatment is only step one. "To meet the evidentiary burden of establishing a violation of equal protection rights protected by the federal or state constitution" a claimant must also show that the alleged disparate treatment "was the result of intentional or arbitrary or systematic discrimination." Programmed Land, 633 N.W.2d at 530.
To be clear, a chapter 278 claim may also allege an intentional claim for unequal assessment. See Hamm, 95 N.W.2d at 654-55 (stating a discriminatory tax claim under chapter 278 that stems from "systematic, arbitrary, or intentional" undervaluation of property is a violation of federal equal protection and state uniformity clauses); United Nat'l Corp., 299 N.W.2d at 73 (holding "no dual standard, one constitutional and other statutory, exists for challenging assessment[s]"). The supreme court has clarified that a showing of "intentional" discrimination is sufficient to establish an unequal-assessment claim, but is not necessary. Id. (clarifying requirement was mere "dictum" from Hamm and overruling requirement).
But we do not presume a discriminatory purpose; a plaintiff must allege "clear and intentional discrimination." Draganosky v. Minn. Bd. of Psychology, 367 N.W.2d 521, 526 n.4 (Minn. 1985) (citing Snowden v. Hughes, 321 U.S. 1, 8, 64 S. Ct. 397, 401 (1944)). Thus, "[a]n erroneous or mistaken performance of a statutory duty may constitute a violation of the statute but will not without more constitute a denial of equal protection." Id. (emphasis added). The United States Supreme Court explained in Snowden that an "element of intentional or purposeful discrimination . . . may appear on the face of the action taken . . . or it may only be shown by extrinsic evidence showing a discriminatory design to favor one individual or class over another." Snowden, 321 U.S. at 8, 64 S. Ct. at 401. And, in the context of property-tax assessments, the United States Supreme Court clarified that "[i]t is not enough to establish a denial of equal protection that some are assessed at a higher valuation than others. The difference must be due to a purposeful discrimination." Id. 321 U.S. at 9, 64 S. Ct. at 401 (emphasis added) (discussing by analogy an equal-protection claim against state property-tax assessments).
The Minnesota Supreme Court has applied the equal-protection principles articulated in Draganosky and Snowden to claims by plaintiffs alleging that disparate treatment was "the product of intentional discrimination." See, e.g., Sheehan v. Franken (In re Contest of Gen. Election Held on November 4, 2008), 767 N.W.2d 453, 464 (Minn. 2009) (affirming judgment dismissing equal-protection claim because plaintiffs neither claimed nor produced sufficient evidence of intentional discrimination during the court trial).
See also Paquin v. Mack, 788 N.W.2d 899, 906-07 (Minn. 2010) (affirming judgment dismissing election petition, in part, for failing to state an equal-protection claim because allegations stated that county auditor "failed to strictly enforce the requirements for registering to vote," which is an "erroneous or mistaken performance of [a] statutory duty" (quoting Snowden, 321 U.S. 1, 8, 64 S. Ct. 397, 401)).
Similarly, Draganosky and Snowden are in accord with Programmed Land's determination that mere "bureaucratic errors" in the assessments process cannot establish "intentional, arbitrary or systematic discrimination." Programmed Land, 633 N.W.2d at 530 (concluding that equal-protection/property-tax claim based on "bureaucratic error" in the assessment process fails as a matter of law). The Minnesota Supreme Court has also held that, without sufficient allegations of disparate treatment, discriminatory effects "do not normally give rise to an equal protection claim." Odunlade, 823 N.W.2d at 648 (citing Village of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 264-65, 97 S. Ct. 555, 563 (1977)).
Based on this caselaw, we conclude that Walmart's complaints fail to state disparate treatment claims for two reasons. First, Walmart's complaints fail rule 12 because they are conclusory and broadly allege that the unequal assessments were "intentionally" discriminatory, but allege no specific facts that the county assessors acted with discriminatory intent. See Hebert v. City of Fifty Lakes, 744 N.W.2d 226, 235 (Minn. 2008) (stating plaintiffs must plead facts to prevail on a rule 12 motion and courts are not bound by legal conclusions). For instance, Walmart's complaints allege that the county assessments of its properties resulted from "intentional discrimination," but fail to allege that the county assessors had a discriminatory purpose and intended to treat Walmart's properties differently than similarly situated properties.
Walmart includes a hypothetical in its reply brief that attempts to illustrate how an independent constitutional challenge to property taxes might arise outside chapter 278 in a scenario where a "county seek[s] to gentrify a neighborhood" and "for example, could intentionally assess properties owned by minority families differently than those owned by non-minorities in order to make it financially unbearable for minorities to stay." Walmart posits that, under those circumstances, a constitutional claim could not be limited to the one-year statute of limitations under chapter 278 because a pattern of "systematic" discrimination takes time to develop and detect. We are not persuaded that this hypothetical is analogous to Walmart's claim for at least two reasons. First, the hypothetical raises intentional discrimination based on a suspect classification, and Walmart's complaints do not. Second, Walmart does not plead it was unaware of the alleged disparate treatment of its properties, nor does it allege facts that the counties' conduct was systematic. In fact, the allegations in its complaints assert that Walmart was aware of the disparate treatment, Walmart notified the counties of their failure to use comparable market sales to assess Walmart's properties, and the counties' conduct was a failure to fulfill statutory duties.
Second, Walmart's complaints allege that the unequal assessments of its properties resulted from the counties' failure to follow "a clear statutory duty" to use "market sales of like property during the pertinent period" and the county assessors' failure "to abide by the statutory duty and statutory requirement to rely on sales of comparable real property." Walmart's complaints also characterize the counties' conduct as an "intentional and willful failure to perform both [its] statutory and its common law duty" to assess Walmart's property and similarly-situated properties "upon a uniform basis." Based on these allegations, we conclude that Walmart alleges, at best, "bureaucratic errors" or "an erroneous or mistaken performance" of the duties imposed on the county assessors by Minn. Stat. § 273.12, which precedent instructs is legally insufficient to state a disparate-treatment claim. See Programmed Land, 633 N.W.2d at 530; Draganosky, 367 N.W.2d at 526 n.4.
In sum, Walmart needed to plead specific facts in its complaints to allege a legally sufficient claim for an equal-protection violation. See Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn. 2003) (stating only facts alleged in the complaint can be considered on a motion to dismiss for failure to state a claim). And Walmart needed to allege sufficient facts in its complaints to establish the elements of its disparate treatment claim. See, e.g., Noske v. Friedberg, 670 N.W.2d 740, 743 (Minn. 2003) (stating rule 12 requires plaintiff to allege sufficient facts to assert elements of a cause of action). Walmart failed to meet its burden. By failing to plead specific facts alleging discriminatory intent and by relying on allegations that the counties violated statutory duties, Walmart's complaints fail to state a constitutional violation under rule 12.
D. Walmart fails to state a claim under 42 U.S.C. §§ 1983 , 1988.
Walmart's complaints state, in relevant part, "As the direct and proximate result of [the counties'] deliberate indifference to and infringement of [Walmart's] statutory rights and constitutional protections, [Walmart] seeks its attorneys' fees and costs, its expert witness fees, and any other reasonable relief provided by law." Walmart asserts that the fees, costs, and damages it has incurred because of the counties' unconstitutional assessments are recoverable under 42 U.S.C. §§ 1983, 1988.
To state a cause of action under section 1983, "[a claimant] must allege (1) that they were deprived of a federal right and (2) that the person so depriving acted under color of state law." Minn. Council of Dog Clubs v. City of Minneapolis, 540 N.W.2d 903, 905 (Minn. App. 1995) (citing Gomez v. Toledo, 446 U.S. 635, 640, 100 S. Ct. 1920, 1923 (1980)), review denied (Minn. Jan. 25, 1996). "In order * * * to bring a claim under 42 U.S.C. § 1983, a specific and articulable constitutional right must have been transgressed and a cognizable claim for relief must be stated on the face of the pleading." L.K. v. Gregg, 425 N.W.2d 813, 818 (Minn. 1988) (quotations omitted). In turn, section 1988 provides that the prevailing party in a section 1983 claim may seek "a reasonable attorney's fee as part of the costs." 42 U.S.C. § 1988(b). Thus, section 1983 provides a cause of action for constitutional claims and section 1988 permits recovery of attorney fees for the successful prosecution of a section 1983 claim.
The counties argue that two United States Supreme Court decisions collectively bar section 1983 claims in state taxation cases. See Nat'l Private Truck Council, Inc. v. Oklahoma Tax Comm'n, 515 U.S. 582, 115 S. Ct. 582 (1995); Fair Assessment in Real Estate Ass'n, Inc. v. McNary, 454 U.S. 100, 102 S. Ct. 177 (1981).The district courts agreed with the counties. In response, Walmart contends that "Fair Assessment bars Section 1983 claims concerning state taxation only in federal court, and National Private Truck Council only addresses claims for injunctive or declaratory relief, not damages." Walmart asserts that this caselaw is distinguishable because it is "seeking redress under Section 1983 in state court under separate and independent claims for violation of its constitutional rights." Moreover, Walmart maintains the federal caselaw cited by the counties' "is largely an irrelevant smokescreen."
We agree with the district courts' conclusion that sections 1983 and 1988 are unavailable to Walmart for two reasons. First, Walmart pleads legally insufficient constitutional claims in its complaints for the reasons already stated. According to the United States Supreme Court, "§ 1983 is not itself a source of substantive rights, but merely provides a method for vindicating federal rights elsewhere conferred." Graham v. Connor, 490 U.S. 386, 393-94, 109 S. Ct. 1865, 1870 (1989) (quotation omitted). Walmart's complaints assert that its section 1983 and 1988 claims are the "direct and proximate result" of the alleged constitutional violations. Yet, we have determined that Walmart's constitutional claims are legally insufficient under rule 12. We therefore conclude that Walmart has not stated "a cognizable claim for relief" under section 1983 "on the face of the pleading," which, in turn, extinguishes any claim for section 1988 attorney fees. Gregg, 425 N.W.2d at 818.
Second, even assuming Walmart has pleaded viable constitutional claims, section 1983 is still legally precluded because chapter 278 provides an "adequate legal remedy." Fair Assessment established that section 1983 may not be used to challenge state taxation in federal court. 454 U.S. at 116, 102 S. Ct. at 186 ("[T]axpayers must seek protection of their federal rights by state remedies, provided of course that those remedies are plain, adequate, and complete."). The United States Supreme Court also held that state courts may not award injunctive or declaratory relief for tax claims under section 1983 when an adequate legal remedy exists under state law.
In determining whether Congress has authorized state courts to issue injunctive and declaratory relief in state tax cases, we must interpret § 1983 in light of the strong background principle against federal interference with state taxation. Given this principle, we hold that § 1983 does not call for either federal or state courts to award injunctive and declaratory relief in state tax cases when an adequate legal remedy exists.Nat'l Private Truck Council, 515 U.S. at 589, 115 S. Ct. at 2355.
And the Minnesota Supreme Court has consistently held that chapter 278 provides taxpayers with an "adequate remedy." Programmed Land, 633 N.W.2d at 523, 530; Krahl v. Nine Mile Creek Watershed Dist., 283 N.W.2d 538, 544 (Minn. 1979); Fichtner v. Schiller, 135 N.W.2d 877, 878 (Minn. 1965); Land O' Lakes Dairy Co. v. Village of Sebeka, 31 N.W.2d 660, 665 (Minn. 1948); cf. Odunlade, 823 N.W.2d at 646 (recognizing no declaratory relief is available under chapter 278). Given that federal precedent holds that a section 1983 claim is not available for state tax challenges when an adequate legal remedy exists, and Minnesota precedent recognizes that chapter 278 provides an adequate legal remedy, we conclude that Walmart's complaints fail to state a claim under sections 1983 and 1988.
We are not persuaded otherwise by caselaw that Walmart borrows from other types of constitutional challenges. For example, Walmart contends that the county assessors have adopted unconstitutional "customs," and, therefore, it has met the "Monell requirement" which permits constitutional suits under section 1983 against municipalities. Monell v. Dep't of Soc. Servs. of City of New York, 436 U.S. 658, 658-59, 98 S. Ct. 2018, 2019 (1978). But Monell considered a class action suit against the city of New York and its mayor brought by female employees disputing an official policy on unpaid maternity leave. Id. The United States Supreme Court held that the plaintiffs could seek relief under section 1983 because the local government had adopted an unconstitutional "custom." Id. at U.S. 694-95, S. Ct. 2037-38. But Monell did not eliminate the section 1983 requirement that a plaintiff exhaust state remedies. Nor did Monell overturn the Supreme Court's specific analysis of when section 1983 may provide relief for state property-tax assessments, as addressed in Fair Assessment and National Private Truck Council.
Walmart also asks us to conclude, by analogizing its claims with those in Knick v. Township of Scott, Pennsylvania, 139 S. Ct. 2162 (2019), that its section 1983 claim survives a rule 12 motion because chapter 278 is not an adequate state remedy, is burdensome, and has the effect of creating a "preclusion trap." Knick is unhelpful here because it involved a Fifth Amendment takings claim, not an equal-protection property-tax-assessment challenge. Nor are we persuaded that Walmart's claim presents a "preclusion trap," as discussed in Knick, and that we should ignore long-standing Minnesota precedent holding that chapter 278 provides an adequate remedy. 139 S. Ct. at 2167.
In sum, section 1983 is unavailable in state taxation cases when an adequate remedy exists under state law and chapter 278 provides taxpayers, such as Walmart, with an adequate remedy. And, when allegations are insufficient to establish a section 1983 claim, then section 1988 attorney fees are unavailable. We therefore conclude that Walmart has failed to state a claim under sections 1983 and 1988, and we affirm the district courts' orders.
Affirmed.