Federal Judge Dismisses Tax Rate Suit, Sending It Back To Worcester For Adjudication

OCEAN CITY — The battle over the property tax rate in Ocean City was sent back to Worcester County last week after a federal judge dismissed a suit filed in U.S. District Court by the Ocean City Taxpayers for Social Justice on several grounds and remanded the case back to Circuit Court.

In June, the Ocean City Taxpayers for Social Justice submitted to the Mayor and Council a petition containing 1,477 signatures validated by the state Board of Elections essentially seeking a roll-back of the property tax rate in the resort to 2009 levels. The petition sought a referendum within 90 days of its filing, or the next scheduled election, which would be November 2016.

Early in July, the Mayor and Council filed a petition for declaratory judgment against the OCTSJ and petition organizer Tony Christ in the Worcester County Circuit Court seeking a judicial review and attempting to halt the petition for referendum at the local level.

Anticipating the Mayor and Council’s move at the Circuit Court level, the OCTSJ and Christ, along with three other plaintiffs including Herb Pawlukewicz, John Medlin and former Ocean City Councilman Joe Hall, 10 days earlier filed a complaint in U.S. District Court seeking a Habeas Corpus hearing at the federal level. Essentially, the four plaintiffs were not confident the petition to return the tax rate to the 2009 level would get a fair shake in Worcester County Circuit Court.

Initially, U.S. District Court Judge Richard Bennett consolidated the town of Ocean City’s petition for declaratory judgment and the OCTSJ’s request for emergency removal of the case to federal court into one action. Last Wednesday, however, Bennett ruled favorably on Ocean City’s motion to dismiss the case at the federal level and remanded it back to Worcester County Circuit Court.

“The plaintiffs petitioned this court under habeas corpus, seeking a federal forum for their grievances,” the opinion reads. “However, the plaintiffs ask this court to either misread or significantly contort established precedent to sustain their federal-based causes of action. As for the removed state declaratory judgment action, it is proper for this court to remand the action to allow the Circuit Court for Worcester County to address these contentions. Accordingly, Ocean City’s motion to dismiss the original complaint, or in the alternative, motion for summary judgment, is granted, and Ocean City’s motion to remand the state declaratory judgment is granted.”

By way of background, in May, a group of concerned property owners in the resort operating under the banner of Ocean City Taxpayers for Social Justice submitted a petition to lower Ocean City’s tax rate to the 2009 level of 38 cents per $100 of assessed value. On the same day, the Mayor and Council approved the fiscal year 2016 budget that raises the property tax rate two cents to 47.8 cents.

In simplest terms, the Ocean City Tax Payers for Social Justice group is seeking a return to the 2009 property tax rate of 38 cents, asserting the increase in the rate over the years has forced many to leave Ocean City to neighboring jurisdictions with lower tax rates and has stifled the growth of small business in the resort forced to pay higher property tax rates.

Meanwhile, the Mayor and Council have contended the increase in the property tax rate in recent years to the fiscal year 2016 rate of 47.8 cents is consistent with the constant yield, or the rate needed to generate the same amount of revenue required to continue to provide the same level of municipal services residents and visitors have come to expect and need.

The OCTSJ, however, collected the requisite number of signatures and filed the petition with the Mayor and Council seeking a referendum vote on the property tax rate reduction request. When the Mayor and Council filed a petition for declaratory judgment in Worcester County Circuit Court seeking a judicial review in an attempt to halt the petition for referendum, Christ and the OCTSJ filed a request in U.S. District Court for the emergency removal of the town of Ocean City’s Circuit Court case to the federal level, asserting the property tax rate as it relates to the constant yield should be a federal question because the alleged arbitrariness of the tax rate change falls under First and Fourteenth Amendment violations.

Essentially, the plaintiffs argued the case should more appropriately be argued in federal court because they didn’t believe it would get a fair hearing at the local level. However, Bennett opined last week the plaintiffs’ belief their case would not be fairly heard at the Circuit Court level was not sufficient to move forward with the case at the federal level.

“Plaintiffs admit that they seek to avoid unfavorable state precedent by filing this action in this court,” the opinion reads. “Specifically, they filed in this court in order to escape the expected adverse ruling in Maryland. Plaintiffs fail to recognize that the potential for an undesirable end to their cause of action in state court does not create a federal cause question.”

In his opinion, Bennett said the OCTSJ’s assertion they would not get a fair hearing at the Circuit Court level failed to provide sufficient proof for a removal to U.S. District Court.

“In their attempt to gain access to the federal courts, the plaintiffs have failed to present a plausible claim for relief on the face of their complaint and, therefore, it will be dismissed,” the opinion reads. “Put simply, the plaintiffs’ efforts to circumvent unfavorable state law precedent are insufficient to afford this court jurisdiction over their inadequately pled federal causes of action.”

In terms of the petition for a writ of Habeas Corpus, the federal judge opined the plaintiff’s did not have a clear understanding of the concept.

“The plaintiffs’ argument is misguided,” the opinion reads. “The writ is hardly as broad as the plaintiffs allege, regardless of the status of their collective Ocean City properties. Moreover, the plaintiffs cite no authority supporting their proposed application. As the plaintiffs have presented no cognizable form of custody that would permit issuance of a writ of habeas corpus, their demand for such a writ must be denied.”

Similarly, Bennett opined the OCTSJ presented no valid claims of any First Amendment violations, the presence of which could have validated the case at the federal level. Instead, the federal judge simply asserted the tax rate issue and the subsequent petition for referendum would more appropriately be heard at the Circuit Court level.

“The plaintiffs have failed to make any showing of a deprivation of their First Amendment rights,” the opinion reads. “They cite no facts or authority that supports a claim of either denial of their right to petition their local government or of access to the courts.”

According to the opinion, by their own admission the plaintiffs did petition their government. The plaintiffs circulated the petition and submitted it to the Ocean City Council after obtaining the requisite number of signatures.

“They have not alleged that a government actor sought to limit their petition or prevented them from submitting the petition,” the opinion reads. “The plaintiffs’ anticipation of not obtaining their desired redress in state court, however, does not transform their claim into a federal cause of action based on denial of access to the courts.”

In terms of alleged Fourteenth Amendment violations, the federal judge essentially moving the case to U.S. District Court in hopes of a more favorable outcome did not justify the move from Circuit Court.

“The plaintiffs have not alleged that the state court would not hear their case, nor have they alleged any cognizable deprivation of their right to a fair trial under the Fourteenth Amendment,” the opinion reads. “The bare assertion of a violation of due process based on the supposed application of unfavorable state court precedent does not state a cause of action sufficient to avoid a motion to dismiss. The plaintiffs mistake what is constitutionally required, a fair trial, for what they desire, a favorable judgment.”

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.