Justia Civil Procedure Opinion Summaries

Chatham County established a fire protection service fee, assessed either as a flat charge per parcel or based on the square footage of structures, on all real property in a special district comprising unincorporated areas of the county. Initially, fire services were provided by Chatham Emergency Services, Inc. (CES), funded by direct payments from property owners. When payment rates fell and CES could no longer provide services as before, the county contracted with CES and adopted a fire service protection tax, later replaced by the Fire Protection Service Fee Ordinance in 2022 and revised in 2023. The fee was collected from property owners in the designated area, with enforcement measures including penalties, collection costs, and potential liens.Property owners Damon L. and Sebrell E. Smith, subject to the fee, filed a class action in the Superior Court of Chatham County, seeking refunds. They contended the fee was actually an illegal tax because it was not ad valorem, as required by Georgia law. The county moved to dismiss and for summary judgment, while the plaintiffs sought class certification and summary judgment. After discovery and hearings, the superior court certified the class and granted summary judgment to the plaintiffs, holding the fire fee was a tax on real property and invalid because it was not assessed ad valorem.The Supreme Court of Georgia reviewed the case de novo. The Court agreed with the lower court that the fire protection service fee was, in substance, a tax rather than a fee or assessment. It further held that, under Georgia constitutional and statutory law, taxes on real property—including those levied in special districts—must be ad valorem. Because the county’s ordinance imposed a non-ad-valorem tax, it was unauthorized and illegal. The Supreme Court of Georgia affirmed the superior court’s judgment in favor of the property owners. View "CHATHAM COUNTY v. SMITH" on Justia Law

Several individuals, including Richard and Jocelyn Markowitz, John and Elizabeth van Merkensteijn, and pension funds they controlled, were found by a jury to have defrauded the Danish tax authority (Skat) by submitting false claims for tax refunds. The defendants conceded before trial that they were never entitled to the refunds under the U.S.-Denmark tax treaty, admitting that they had not owned Danish shares or received dividends subject to Danish withholding tax. However, they argued that they had been misled by a London-based trading partner into believing otherwise and were unaware that the refund claims submitted on their behalf were fraudulent.The United States District Court for the Southern District of New York presided over the case after it was consolidated as part of multidistrict litigation. The defendants unsuccessfully moved to dismiss Skat’s claims, contending that the common law revenue rule barred the suit. The district court held that because the defendants never owned the relevant Danish stocks or paid taxes, Skat’s claims were for commercial fraud rather than enforcement of Danish tax law. After trial, the jury found each defendant liable, and the district court entered judgments totaling over $476 million based on Skat’s gross payments and prejudgment interest.On appeal, the United States Court of Appeals for the Second Circuit reviewed the case. The court held that Skat’s lawsuit was not barred by the revenue rule because it did not seek to enforce foreign tax laws, but rather sought recovery for fraud. The court also found no abuse of discretion in the district court’s exclusion of certain evidence and upheld the sufficiency of evidence supporting judgments against Jocelyn Markowitz and Elizabeth van Merkensteijn under an agency theory. The Second Circuit affirmed the district court’s judgment. View "Skatteforvaltningen v. Markowitz" on Justia Law

A partnership claimed a charitable deduction after donating a conservation servitude on real property. The Internal Revenue Service audited the partnership’s tax filing and, in 2025, issued a Notice of Final Partnership Adjustment, disallowing the deduction and imposing both a civil fraud penalty and several valuation-related penalties for negligence, substantial understatement, and gross-valuation misstatements. The partnership responded by filing suit in the United States District Court for the Western District of Louisiana, seeking a pre-payment jury trial to contest the penalties and requesting both injunctive and declaratory relief. The partnership also filed a parallel petition with the U.S. Tax Court for a downward adjustment of the IRS’s determination.In the district court, both parties moved for judgment on the pleadings. The court granted the IRS’s motion and dismissed the case for lack of subject matter jurisdiction, relying on the Anti-Injunction Act (AIA) and the Declaratory Judgment Act (DJA). The district court reasoned that the penalties imposed by the IRS constitute “tax” within the meaning of relevant statutes, thereby stripping federal courts of jurisdiction to hear pre-payment challenges to such assessments.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed whether accuracy-related penalties under 26 U.S.C. § 6662 are treated as “tax” for purposes of the AIA and DJA. The Fifth Circuit held that these penalties are indeed treated as “tax,” and thus, both the AIA and DJA bar federal court jurisdiction over the partnership’s pre-payment challenge. The court further determined that Tax Court provides an alternative forum for such disputes. The Fifth Circuit affirmed the district court’s dismissal for lack of subject matter jurisdiction. View "Norcave Properties v. IRS" on Justia Law

Dougherty Electric, Inc. sought a refund from the IRS for fraud penalties and interest it paid in connection with employment tax liabilities arising from a payroll scheme orchestrated by its sole shareholder between 2001 and 2005. After the shareholder pleaded guilty to tax evasion and was ordered by the U.S. District Court for the Eastern District of Pennsylvania to pay restitution, the IRS audited Dougherty Electric, assessed employment taxes and fraud penalties, and Dougherty Electric paid over $1.5 million. The deadline for filing a refund claim with the IRS was December 11, 2017.Dougherty Electric submitted a timely letter to the IRS on December 7, 2017, asserting a refund claim based on the theory that penalties and interest could not be assessed on criminal restitution, referencing Klein v. Commissioner, 149 T.C. 341 (2017). After the deadline passed, it submitted another letter raising a new theory—that the fraud penalties lacked supervisor approval required by 26 U.S.C. § 6751(b)(1. In 2018, Dougherty Electric submitted formal refund claims and supporting documentation, but the IRS rejected the claims. Dougherty Electric then sued in the United States Court of Federal Claims, which dismissed the complaint for lack of subject-matter jurisdiction, concluding that Dougherty Electric had not timely filed a proper refund claim with the IRS.On appeal, the United States Court of Appeals for the Federal Circuit reviewed the dismissal de novo. The court held that failure to comply with the pre-suit filing requirement of 26 U.S.C. § 7422(a) did not deprive the Court of Federal Claims of subject-matter jurisdiction but did require dismissal for failure to state a claim. The court found that Dougherty Electric’s timely claim satisfied the statutory requirement regarding the Klein theory, but not as to the supervisor approval theory. The court affirmed dismissal as to the supervisor theory, vacated dismissal as to the Klein theory, and remanded for further proceedings. View "DOUGHERTY ELECTRIC, INC. v. US " on Justia Law

The appellant submitted a whistleblower application to the Internal Revenue Service (IRS) alleging that two taxpayers had underpaid taxes from 2004 to 2012 and requested that the IRS also consider similar conduct for 2013 through 2017 when determining any award. The IRS had already begun investigating much of the reported conduct and ultimately collected proceeds from the taxpayers. However, the IRS’s Whistleblower Office denied the claim, reasoning that the information provided was either previously known or “tainted”—meaning it was unlawfully obtained or privileged—and asserted it did not rely on this information when auditing the later years.After receiving this denial, the appellant sought review in the United States Tax Court. The appellant requested to supplement the administrative record or conduct discovery regarding the audits for 2013 through 2017, arguing that the record did not adequately show whether her information was used. The Tax Court denied these requests, citing procedural deficiencies in how discovery was sought, and granted summary judgment to the IRS, finding the administrative record sufficient to support the IRS’s determination.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court held that the IRS’s rationale for denying the whistleblower award for tax years 2013 through 2017 was not supported by the administrative record, which was largely silent regarding those years. The court concluded that the IRS’s decision was arbitrary and capricious because it did not reasonably investigate or explain whether the whistleblower’s application contributed to the audits for those years. The court reversed the Tax Court’s decision and remanded the case for further proceedings consistent with its opinion. View "Trongone v. Cmsnr. IRS" on Justia Law

A Virginia-based partnership owned a property in the District of Columbia. In 2002, this partnership and a limited liability company (LLC), both related entities, executed a merger under Virginia law, with the LLC surviving and acquiring the property. The merger documents referenced Virginia statutes governing mergers, and the transaction resulted in the property being transferred from the partnership to the LLC. No deed was recorded at the time, and no recordation or transfer taxes were paid.In 2019, when the LLC sought to sell the property, it attempted to record a deed reflecting the 2002 transfer as a no-consideration event, claiming the transaction was a non-taxable conversion rather than a taxable merger. The Recorder of Deeds (ROD) determined the 2002 transaction was a merger, requiring payment of recordation and transfer taxes based on the property’s 2019 fair market value, since no consideration was paid. LHL, the taxpayer, paid the taxes under protest and pursued an administrative refund, which was denied. The taxpayer then challenged the decision in the Superior Court of the District of Columbia.The Superior Court granted summary judgment to the District, finding the transfer was a taxable merger, not a conversion, and upholding the calculation of taxes based on the 2019 value. The District of Columbia Court of Appeals reviewed the case de novo and affirmed the Superior Court’s judgment. The appellate court held that the 2002 transaction was a merger between two distinct entities, making the property transfer taxable, and that taxes on no- or nominal-consideration transfers are properly based on the property’s fair market value at the time of recordation. The court also upheld the trial court’s finding of excusable neglect regarding the District’s untimely filing of its answer. View "LHL Realty Company DC LLC v. District of Columbia" on Justia Law

The dispute arose after the City approved a light rail project and formed a corporation, Austin Transit Partnership (ATP), to implement it. Voters approved a tax increase to fund the endeavor, and ATP—not the City—planned to issue municipal bonds. Taxpayers challenged ATP’s authority to issue these bonds, leading the City and ATP to seek a declaratory judgment confirming their power to assess taxes and issue bonds. The Attorney General, participating as permitted by statute, filed a plea to the jurisdiction, contending neither the City nor ATP qualified as an “issuer” under the statute governing expedited declaratory judgment actions.In the District Court, the City and ATP sought a quick resolution so the project could proceed, while the taxpayers and Attorney General desired delay. ATP’s counsel advised the court not to rule on the Attorney General’s plea to the jurisdiction, thus avoiding an interlocutory appeal and the associated automatic stay. The court accepted this suggestion, explicitly refusing to rule on the plea and moving forward toward trial. The Attorney General then filed a notice of interlocutory appeal, arguing the court’s actions amounted to an implicit denial. The trial court reiterated it had not ruled, and the Court of Appeals for the Fifteenth District dismissed the appeal, finding no order granting or denying the plea and therefore no appellate jurisdiction.The Supreme Court of Texas reviewed the case, holding that a trial court must rule on jurisdictional challenges before proceeding to the merits and cannot strategically avoid issuing a ruling to frustrate the government’s appellate rights. Because the absence of a ruling deprived the State of its statutory right to interlocutory appeal, and no adequate remedy by appeal existed, the Court treated the Attorney General’s petition as a request for mandamus and conditionally granted relief, directing the trial court to rule on the plea to the jurisdiction. The judgment of the Court of Appeals was left undisturbed. View "PAXTON v. THE CITY OF AUSTIN" on Justia Law

A company serving as the project administrator for several partially income-restricted apartment complexes operated with the aim of providing affordable housing for middle-income tenants maintained constructive possession and control over the properties, which are owned by a local Joint Powers Authority (JPA) and thus exempt from ad valorem property taxation under the California Constitution. The company received significant fees and bond revenues from its administration of the complexes. The county assessor determined that the company’s exclusive control and financial benefits met the statutory criteria for a taxable “possessory interest,” and assessed property taxes accordingly. The company initially contested the tax assessments before the Orange County Assessment Appeals Board but filed a separate action for declaratory relief in superior court before the administrative proceedings concluded, seeking a declaration that neither it nor its tenants were liable for these taxes.The Superior Court of Orange County denied the county’s special motion to strike the complaint under California’s anti-SLAPP statute (Code of Civil Procedure section 425.16), finding that the company’s declaratory relief claim did not arise from the county assessor’s protected activity under the statute’s first prong. The court did not reach the question of whether the company could show a likelihood of success on the merits under the statute’s second prong.The California Court of Appeal, Fourth Appellate District, Division Three, conducted a de novo review and held that the claim for declaratory relief did arise from the assessor’s protected speech, petitioning, and advocacy activities under section 425.16. The appellate court reversed the order denying the anti-SLAPP motion and remanded the matter with instructions for the trial court to determine whether the company can demonstrate a probability of prevailing on the merits under the second prong of the anti-SLAPP statute. View "Waterford Property Co. v. County of Orange" on Justia Law

A business in Connecticut was assessed personal property taxes from 2008 to 2016. The defendant, who had moved to California years earlier and claimed to have left the business by 2007, was never notified of these tax assessments at her California address, despite having provided it to the tax collector in 2011 and 2016. Over the years, the city’s tax collector took funds from the defendant’s bank accounts multiple times via bank executions to satisfy the tax debt, without ever sending her a tax bill or notice at her actual residence.In 2021, the tax collector initiated another bank execution against the defendant. The defendant challenged this action, arguing she had not received due process or required statutory notice. The Superior Court for the judicial district of Litchfield held an evidentiary hearing and agreed with the defendant, finding the tax collector failed to provide required notice under General Statutes § 12-155 (a) and that the lack of notice deprived her of the opportunity to challenge the tax assessment. The court granted the defendant’s exemption motion, rendering the execution “of no effect.” The tax collector initially appealed but then withdrew the appeal. After sending a written demand to the defendant’s California address, the tax collector initiated a new bank execution, again without providing a new tax bill or an opportunity to challenge it.The trial court found the new action was a collateral attack on the earlier judgment and barred by collateral estoppel. The Appellate Court affirmed, concluding the issue of notice and opportunity to challenge had been actually litigated and necessarily determined in the 2021 action.The Connecticut Supreme Court affirmed the Appellate Court’s judgment. It held that, under Connecticut law, collateral estoppel applies to all independent, alternative grounds actually litigated and determined in a prior judgment, making them preclusive in subsequent actions. Thus, the tax collector was barred from relitigating the notice and due process issues already decided. The Court declined to recognize a public policy exception for municipal tax collection cases. View "Torrington Tax Collector, LLC v. Riley" on Justia Law

A municipal tax collector initiated a bank execution action against an individual to collect unpaid personal property taxes owed by a business with which the individual was previously associated. The individual had moved to California years earlier and claimed that she never received notice of the tax debt or an opportunity to contest it, despite providing her new address to the tax collector. Previous bank executions had been initiated, but the individual continued to assert lack of notice. In the 2021 action, the trial court found that the tax collector failed to comply with statutory notice requirements and that the individual had not been afforded due process, leading the court to grant her exemption from the execution.Following the 2021 judgment, the tax collector withdrew its appeal and attempted a new bank execution after sending written demand to the individual's California address, but did not provide a new tax bill or opportunity to challenge it. The individual again moved for exemption. The Superior Court concluded that the new execution was a collateral attack on the previous judgment and was barred by doctrines of res judicata and collateral estoppel. The Appellate Court affirmed, finding that the issue of notice and opportunity to challenge the tax debt had been actually litigated and necessarily determined in the prior action.Upon review, the Connecticut Supreme Court held that collateral estoppel barred the municipal tax collector from relitigating whether it could execute on the individual's funds without first providing adequate notice and an opportunity to challenge the underlying tax debt. The Court determined that both independent, alternative grounds supporting the earlier judgment were entitled to preclusive effect and declined to create a public policy exception for municipal tax collection actions. The Supreme Court affirmed the judgment of the Appellate Court. View "Torrington Tax Collector, LLC v. Riley" on Justia Law