Fair Assessment in Real Estate Assn., Inc. v. McNary

Background

A group of St. Louis County taxpayers formed a nonprofit called Fair Assessment and two homeowners, J. David and Lynn Cassilly, sued county and state tax officials. They claimed unequal property assessments — newer-improvement properties at about 33 1/3% of market value versus older properties at about 22% — and alleged retaliatory reassessments after successful appeals. The Cassillys had pursued some state remedies: a 1977 Board of Equalization appeal reduced their assessment, and another appeal was pending when they filed their federal suit seeking money and punitive damages under the federal civil-rights statute (42 U.S.C. §1983).

Reasoning

The Court confronted two lines of past decisions: one limiting federal courts’ interference in state tax collection (the Tax Injunction Act and comity decisions), and another allowing immediate federal §1983 suits without exhausting state remedies. The majority, led by Justice Rehnquist, held that the comity principle controls in cases challenging the administration of state tax systems. The Court explained that a damages award under §1983 would first require a federal finding that the tax administration was unconstitutional — effectively a declaratory ruling — and that such federal intrusions would disrupt state tax collection and chill officials’ duties. The District Court’s finding that Missouri offered adequate state remedies was untouched.

Real world impact

As a result, taxpayers who challenge how a state runs its tax system cannot pursue federal §1983 damage suits where state remedies are available. They must first use the state administrative and court procedures (if those remedies are plain, adequate, and complete). The ruling narrows occasions for federal suits that would directly affect state revenue systems.

Dissents or concurrances

Four Justices joined a separate opinion concurring only in the judgment. Justice Brennan agreed the suit should be dismissed but objected to abandoning federal jurisdiction broadly; he emphasized exhaustion rules and statutory history as the proper basis for dismissal in this case.