Please E-mail suggested additions, comments and/or corrections to Kent@MoreLaw.Com.
Help support the publication of case reports on MoreLaw
Date: 10-17-2011
Case Style: E & F Cox Family Trust, et al. v. City of Tulsa, et al.
Case Number: 109,279
Judge:
Court: Oklahoma Court of Civil Appeals
Plaintiff's Attorney: Kirsten Bernhardt and Alfred K. Morlan
Defendant's Attorney: Gerald Bender for the City of Tulsa
Fred Dorwart for Intervenors
Description:
Appellants' Brief This case involves an objection by certain downtown Tulsa property owners to the creation of the Tulsa Stadium Assessment District. The Stadium Assessment district is approximately 1.5 square miles around downtown Tulsa. The property owners in the district are being assessed $60 million for the purpose of repaying money borrowed by the Tulsa Stadium Trust to finance a multipurpose stadium for the Tulsa Drillers baseball team. The City is also assessing the property owners an additional $30 million for “services” without specifying what those services are to be, or how they will benefit the assessed properties. Plaintiffs requested declaratory judgment on the issue of whether such an assessment is in violation of state and federal constitutional provisions, and pertinent state statutes. The trial court dismissed all but one Plaintiff on procedural grounds. The trial court held that such an assessment was valid if there was a “rational basis” for the Tulsa City Council to believe that a stadium might provide some economic benefit to the assessed area in the form of potential higher property values. The court found after presentation of Plaintiff’s case at trial, there was a “rational basis” for the City Council’s actions, and granted a Defendant and Intervenors’ demurrer to the evidence. From that Order and the previous dismissal of parties, Appellants bring this appeal.
Appellants assert that a multipurpose baseball stadium and event facility seating over 7,000 spectators is a general public improvement for the benefit of the entire community, and that a municipality may not finance a project of this sort by assessing the surrounding property owners. Appellants further assert that even if such a facility were a local improvement, possible generalized future economic benefit flowing to the assessment district does not satisfy the statutory requirement that the assessed properties directly and specially benefit from the improvement. Appellants argue that a relatively recent amendment to the assessment statute exempting property owned by religious organizations from paying their share of the cost of local improvements without exempting other non-profit organizations violates the First Amendment. Appellants further assert that the trial court made numerous reversible errors in the conduct of litigation below, including dismissing certain Plaintiffs, giving the remaining Plaintiff five days notice of pretrial, setting trial on less than four weeks notice when Plaintiff still had little or no discovery from Defendants, and refusing to allow Plaintiff time to review over 35,000 pages of discovery produced less than ten days prior to trial.
SUMMARY OF THE RECORD
On July 10, 2008 the Tulsa City Council adopted Resolution 7571. That Resolution created “Tulsa Stadium Improvement District No 1,” the boundary lines of which are the highways surrounding downtown Tulsa known as the Inner Dispersal Loop, or IDL, enclosing an area of approximately one and a half square miles. The stadium (“ONEOK Field”) was intended as a multipurpose entertainment venue, and the new home for the Tulsa Drillers, a minor league professional baseball team. The Stadium Improvement District exempts property owned by religious organizations and used primarily for religious purposes.
The first part of the assessment is $0.043 per square foot of real property together with the area of all improvements thereon which is intended to be given to the Tulsa Stadium Trust to pay the interest and principal indebtedness on revenue bonds issued for $25 million of the construction costs of the stadium. The $0.043 portion of the assessment for the debt incurred in the construction of the stadium will amount to a total payment of approximately $60 million by the assessed property owners over the 30-year period of the assessment. Id. The second part of the assessment is $0.022 per square foot of real property together with the area of all improvements thereon to provide unspecified “services” to the district. Id. The $0.022 portion of the assessment for unspecified “services,” will amount to $1.1 million per year, or a total payment of $33 million by the assessed property owners over the 30-year period of the assessment. The $0.022 per square foot for “services” is unrelated to the stadium. Id.
On July 7, 2008, prior to the July 10, 2008 hearing, Appellants E & F Cox Family Trust, Plaintiff T.E. Morlan, and Michael Samara filed a written objection to the creation of the assessment district with the City Clerk, and had it hand delivered to each member of the City Council, and sent to the mayor and city attorney as well. Each of these parties sent their attorney to the meeting to orally object on their behalf. The owners of Koenig Properties also made repeated written objection in the form of numerous emails to the Mayor and City Council. Id. at Exhibit C. On July 11, 2008, Plaintiffs filed the present action in the district court challenging the creation of the assessment district. The court found that these parties failed to follow the notice requirements of 11 O.S. § 39-108(D) and dismissed them from the lawsuit. (R. 918-920, Order on Motion to Dismiss.)
The court further found that the personal appearance of Mr. Edward Cox as representative of the E. & F. Cox Family Trust did not meet the requirements of the statute to appear at the hearing because he did not specifically state at the hearing that his ownership of the property was through the trust he created and of which he was beneficiary, and because his request to speak form did not mark “against” the resolution. Id.
On September 18, 2008, the Council adopted an ordinance approving the creation of the Tulsa Stadium Trust. The function of the Trust is primarily to acquire, construct, own and operate and sell the baseball stadium, and do the same for amenities and facilities necessary or convenient thereto. Tulsa Baseball, Inc, owner of the Tulsa Drillers, has signed a thirty-year lease with the Tulsa Stadium Trust for the use of the stadium in which the Drillers will pay an annual rent of $150,000 with an option to renew for up to ten additional years.
On November 20, 2008, the Council adopted a resolution approving the issuance of revenue bonds by the Tulsa Stadium Trust in the total principal amount of $25,000,000 (“the Bonds”) to finance a portion of the construction costs of the stadium. On December 4, 2008, the Tulsa Stadium Trust issued and sold the $25 million Stadium Improvement District Revenue Bond to the Tulsa Community Foundation, a public charity which now owns the Bonds. The Community Foundation purchased the bonds when no commercial lender would do so because of this action challenging the legality of the assessment. The $.043 per square foot portion of the assessment will be given to the Trust and used to pay its indebtedness on the bond owned by the Tulsa Community Foundation. Construction of the stadium began after the filing of this action in the district court and the completed structure in now known as ONEOK Field.
Plaintiffs filed a Motion for Summary Judgment asking the Trial Court to decide the case as a matter of law. (R.215-600, Pl. MSJ 4/7/2010). The trial court issued an Order stating only that there were material questions of facts at issue and making no rulings on law, nor specifying what those material fact questions might be. (R. 916-917 09/16/10.) Numerous discovery battles followed as the Plaintiffs objected to abusive discovery requests from Intervenors for such things as all business ledgers, records and receipts of Plaintiff property owners. (R. 922-935), (R. 936-951), (R. 952-968), (R. 969-999), (R. 1008-1051), (R. 1052-1185), (R. 1188-1194) (R. 1197-1204) (R. 1368-1376) (R. 1377-1408) (R. 1439-1445).
The Court held a scheduling conference on October 29, 2010. At that time counsel for Plaintiffs requested guidance from the court as to what discovery would be relevant for trial. Plaintiffs had as yet received virtually none of the discovery they had requested from the City, but were being overwhelmed by discovery requests from Intervenors. Counsel continued to maintain that evidence as to the financial condition of the various parties and property owners was irrelevant and asked the court to rule on that issue. (R. 1890, Tr. 10/29/10 pp 4-8.). The Court instructed Plaintiff’s counsel to prepare proposed questions of fact, but when counsel persisted that she must have a ruling from the court on certain legal issues before those questions could be framed, the court acquiesced and agreed to rule on the questions of law. (R.1890, Tr 10/29/10 p 24.) The Court never did address the legal questions, so prior to hearing on the matter, counsel prepared a flow chart to show what questions of fact would be presented depending upon how the court ruled on the questions of law. (R. 1534-1538, Plaintiff’s Proposed Order of Questions for the Court 12/8/10). In the meantime, without hearing, the Court granted a motion from Intervenors holding that the sole question at trial was whether “the Tulsa City Council had a rational basis upon which to determine that, as a general matter, property within the Improvement District was reasonably expected to increase in value as a result of the creation of the Improvement District.” (R. 1515-1516). Plaintiff’s counsel continued to vigorously object to this ruling and the imposition of an erroneous legal standard. (R. 1725-1737).
Although no scheduling order had ever been entered and the discovery issues remained unresolved, the court abruptly entered an order on December 28, 2010 setting the matter for trial on January 24, 2011. (R. 1564). Plaintiff was given five days notice of Pretrial Conference (R. 1565-1574) which was set for January 3, 2011. At that conference Plaintiff protested both that one month was insufficient notice for such a significant trial, that lead counsel for Plaintiff had conflicting felony matters scheduled at the same time, that Plaintiff had never had an opportunity to seek discovery following the court’s ruling on what question of fact the court believed needed to be resolved at trial, and that the City of Tulsa had never complied with the requests for production of documents previously submitted. (R. 1891, Tr. 1/3/2011). The Court overruled these objections. At a status conference prior to trial on January 20, 2011, Plaintiff’s counsel renewed these objections and informed the court that the City had just dumped approximately 35,000 to 50,000 pages of documents on Plaintiff, which could not possibly be reviewed in the few days prior to trial. (R. 1892, Tr. 1/20/2011.) The trial court overruled these objections and trial commenced on January 24, 2011.
At trial the Court refused to allow Plaintiff to call certain property owner witnesses to testify as to the effect of the stadium, and the lack of benefit received. (R. 1885, Tr. Vol 1, p. 129-131). The Court refused to allow Plaintiff to cross-examine adverse parties and witnesses who were called in Plaintiff’s case in chief. (R. Tr Vol II, p. 295, line 13-21.) Subsequent to trial the Court awarded certain costs and attorney’s fees to Intervenors. (R. 1926-1928), overruling counsel’s objections (R. 1757-1760 and (1807-1814).
ARGUMENT AND AUTHORITY
PROPOSITION I
Oklahoma law does not allow a municipality to use the power of assessment to force certain property owners to finance the construction of a general public improvement such as a baseball stadium.
The authority of a municipality to assess property owners is not an inherent power of government, but is based entirely upon statute. See Improvement District Act, 11 O.S. § 39-101 et seq. This statutory authority emanates from the Oklahoma Constitution at Article 10, § 7 which states: “The Legislature may authorize county and municipal corporations to levy and collect assessments for local improvements upon property benefited thereby….” [Emphasis added] The statutes granting municipalities the power to assess property owners must be strictly construed in favor of the property owner. Lance v. City of Sulphur, 1972 OK 145, ¶ 15, 503 P.2d 867; Bonney v. Smith, 1944 OK 149, ¶ 6, 147 P.2d 771 ; American-First National Bank v. Peterson, 1934 OK 695, ¶ 15, 38 P.2d 957; Pauls Valley National Bank v. Foss, 1924 OK 552, ¶ 0, 226 P. 567.
The statute provides enumerated examples of such local improvements including sidewalks, service connections from sewers and utility mains, street lights, water mains, playgrounds, landscaping, flood control works, vehicle and pedestrian bridges, retaining walls, pedestrian malls and parking facilities. 11 O.S. § 39-103. This partial list shows the nature and type of improvements contemplated by the assessment statute. Whether a public improvement is “local” is normally a question of law. 70C Am. Jur. 2d Special of Local Assessments § 160. No assessment may be made in Oklahoma to pay for general public improvements. City of Lawton v. Akers, 1958 OK 292, ¶ 14, 333 P.2d 520; Bragdon v. City of Muskogee, 1928 OK 659, ¶ 16, 271 P. 1006; Rollow v. City of Ada, 1990 OK 59, ¶ 18, 794 P.2d 1211; see also 63 C.J.S. Municipal Corporations § 1129, at 336 (1999).
A multi-purpose stadium seating over 7,000 spectators for professional baseball games, concerts and the like is an inherently general improvement for the benefit the public and the city at large. ONEOK Field is almost identical in function to the BOK Arena, the Performing Arts Center, and the Maxwell Convention Center, all of which are similar sports and entertainment venues inside the assessment district, each of which was funded primarily through general obligation bonds following municipal bond elections.
The Court in Application of Erick Hospital District, 1968 OK 112, 444 P.2d 216 explained that local improvements “must be limited to such improvements as are … special and peculiarly beneficial to the property affected and thus to its owners as contra distinguished from such as are only beneficial to property in general or to the general public.” Id at 219. In Erick, the Court held that a hospital could not be financed by assessment because while the hospital may have been physically closer to the assessed properties, it was still by its nature for the benefit of the community at large. Similarly, ONEOK Field is for the benefit and use of the entire community, and does not exist specially for the benefit of nearby real property.
In Public Service Company of Oklahoma v. Northwest Rogers County Fire Protection District, 1983 OK 96, ¶ 17, 675 P.2d 134, 138, the Court explained:
The term ‘local improvement’ refers only to improvements which are in fact or, by a proper exercise of legislative discretion, may be determined to be, specially or uniquely beneficial to the property affected...Local improvements which benefit a particular district with a city also may incidentally benefit the entire city...so long as the benefit to the district substantially exceeds the benefit received by the city... [Emphasis added].
In that case the Court found that an assessment to fund a fire protection district was a “local improvement” because the fire protection would exclusively and specifically benefit the district.
The local improvements contemplated under 11 O.S. § 39-103 each provide tangible, immediate benefits which are generally physically linked in some way to the real property being assessed. If a street light is installed, then the property served is immediately illuminated while the properties across town are not. If a sewer line is installed, then the properties attached to that line immediately enjoy the benefits thereof while properties not connected to that sewer line do not. A sidewalk provides for pedestrian comfort and access for people crossing or visiting that property.
“[The legislature] cannot by its fiat make a local improvement of that which in its essence is not such an improvement, and it cannot by its fiat make a special benefit to sustain a special assessment where there is no special benefit.” The City of Lawton v. Akers, 1958 OK 292, ¶ 23, 333 P.2d 520. “It is not within the power of the Legislature to authorize, or the City to impose, a special assessment upon properties not benefited.” Id at ¶ 27.
A city council may not assign the cost of a general public improvement to a narrow group of property owners simply by engaging in the fiction that the improvement is local in nature. A sidewalk is a local improvement. A 7,000-seat multipurpose sports and entertainment stadium is not. If a city can pretend that a major construction project such as ONEOK Field is a local improvement under the assessment statute, then there is literally no limitation on what a City could do by assessment. No enterprising municipality would ever again subject a major project to the vicissitudes of a tight-fisted electorate when the City Council could simply decree it to be a local improvement and prescribe a number of properties obligated to pay for it. Because a baseball stadium is an inherently general improvement for the City at large, it falls outside the scope of the assessment statute. The resolution creating the assessment district was clearly an ultra vires act of the Tulsa City Council.
PROPOSITION II
The assessment at issue violates of the taking clauses of Article II §§ 23 and 24 of the Oklahoma Constitution as well as the taking clauses of the Fifth and Fourteenth Amendments to the United States Constitution.
It is a fundamental principal of law that the government cannot take private property without just compensation. See Okla. Const. art. II, § 23 (“No private property shall be taken or damaged for private use, with or without compensation…”); Okla. Const. art. II, § 24 (“Private property shall not be taken or damaged for public use without just compensation….”); U.S. Const. amend. V (“…nor shall private property be taken for public use, without just compensation….”); U.S. Const. amend. XIV (“…nor shall any State deprive any person of life, liberty, or property, without due process of law).
The Oklahoma Supreme Court has recognized the constitutional implications of the taking of private property through assessment many times. The Court said,
It is fundamental that private property cannot be taken for a private or public use without compensation. Art. II, §§ 23 and 24 Oklahoma Constitution. We think these provisions of the constitution are applicable when a city attempts to impose a special assessment against property which will not be benefited by the improvement.
The City of Lawton v. Akers, 1958 OK 292, ¶ 22, 333 P.2d 520 [Emphasis added]. Similarly the Erick court noted: We believe that, in the circumstances, the levying and collecting of the assessments as provided for in this act would constitute the taking of private property without just compensation, in violation of the provisions of Section 24 of Article II of the Constitution of the State of Oklahoma.
Erick, supra at ¶ 23.
The court discussed the importance of the protection of private property rights at length in Board of County Commissioners of Muskogee County v. Lowery, 2006 OK 31, 136 P. 3d 639, an analogous condemnation matter. The Lowery Court said: “The framers of the Oklahoma Constitution likewise recognized "that to protect both life and property is the first duty of government." Id. at ¶ 10 (citing Albert H. Ellis, A History of the Constitutional Convention of the State of Oklahoma at iv (Introduction and Endorsement by William H. Murray, President of the Constitutional Convention) (1923)). “We adhere to the strict construction of eminent domain statutes in keeping with our precedent, mindful of the critical importance of the protection of individual private property rights as recognized by the framers of both the U.S. Constitution and the Oklahoma Constitution.” Id at ¶ 11.
PROPOSITION III
The Resolution creating the assessment district is unlawful because it will assess $1.1 million dollars a year from the subject property owners for “services” without specifying what those services are to be, rendering it impossible to determine what benefit would be received and whether the benefit is proportional to the burden placed upon the property as required by statute.
The assessment district at issue contains two separate assessments. The first $0.043 per square foot is to repay a loan for the building of a baseball stadium. The second assessment of $0.022 per square foot ($1.1 million annually) gives no purpose at all except to say it will be for services as yet undecided. The language purporting to provide a purpose for this portion of the assessment is as follows:
An additional one point one million dollars ($1,100,000.00) annually is assessed for cost of services which are described as follows: “The services could include: maintenance, cleaning, security, shuttle service, upkeep, marketing, management, other services which confer special benefits to the property within the District by preserving, enhancing, or extending the value or usefulness of any improvement in the District, whether or not the improvement was financed or constructed pursuant to the Improvement District Act.” . [emphasis added.]
See Project Budget at Subpart II. B., of the Plan Summary attached as Exhibit A of the Resolution 7571 The portion highlighted in bold above simply mirrors the text of 11 O.S. § 39-103.1 A which provides in pertinent part: In addition to those purposes set out in Section 39-103 of this title, the governing body of any municipality …may create one or more districts and levy assessments for the purpose of providing or causing to be provided any maintenance, cleaning, security, shuttle service, upkeep, marketing, management or other services which confer special benefits upon property within the district by preserving, enhancing or extending the value or usefulness of any improvement described in Section 39-103 of this title, whether or not the improvement was financed or constructed pursuant to this act ….[emphasis added.]
An assessment such as the one at issue is void on its face. Not only does it not describe what services are to be provided, it doesn’t even describe what “local improvement” is to be preserved or enhanced. The ordinance specifically states that the $0.022 portion is to be assessed even if the stadium were never built. A city is not empowered to assess generally for services that are not linked to a specific improvement. This assessment is nothing more nor less than a $1.1 million annual discretionary fund for the City of Tulsa.
A City’s powers of assessment are strictly limited by statute and the state constitution, as set out in the authorities cited in the previous sections. A City may only assess properties to construct a local improvement, or to service a local improvement. It offends the most basic principles of constitutional law to allow a municipality to assess a group of property owners to create a fund to provide unspecified services for an unspecified improvement, and rather, simply quote the language of the statute listing all possible permissible purposes. To do so renders the statute meaningless. If an assessment such as this were allowed to stand, then any municipality could assess any group of property owners any sum of money for no stated purpose whatsoever. With no stated purpose for this assessment, the resolution is unconstitutional on its face and the Court should reverse the decision of the trial court, prohibit the City of Tulsa from taking any action in furtherance of the assessment district, and order the refund of monies paid thus far.
PROPOSITION IV
Even if a 7,000-seat stadium were a local improvement, this assessment would still constitute an unconstitutional taking without just compensation because the only benefit ascribed to the subject properties is a potential and purely speculative future economic benefit and not an “actual, physical and material” benefit peculiar to the assessed properties as required under Oklahoma law.
The assessment must fail at the outset because a baseball stadium is quite simply not a local improvement. But the assessment would still fail the next level of scrutiny even if it were a local improvement because the benefit that will supposedly flow to the assessed properties is nothing more than a speculative hope of future economic prosperity and higher property values. Even if such a remote and speculative benefit were to actually materialize for every one of the assessed properties, the increase in property values or economic prosperity could not be tied directly to the construction of a stadium. “It has been ruled that benefit to property from a public improvement to sustain a special or local assessment must be actual, physical, and material, and not merely speculative or conjectural. In order to justify the assessment, the benefit must be substantial, certain, and capable of being realized within a reasonable time.” City of Lawton v. Akers, 1958 OK 292, ¶ 18, 333 P.2d 520 (quoting 48 Am. Jur. Special or Local Assessments § 28) [emphasis added].
The speculative nature of the benefit was directly acknowledged at the City Council meeting by the economics expert, Mark Sneed, and also by Stanley Lybarger, chairman of the Tulsa Stadium Trust and President and CEO of the Bank of Oklahoma. Furthermore, the City of Tulsa never claimed that the new stadium would provide this hoped for economic benefit by itself. Rather, it was hoped that the Stadium together with such other improvements as the BOK arena and the Maxwell Convention Center would be like a three-legged stool, and together would provide “synergy” for possible economic prosperity.
The Oklahoma Supreme Court has rejected economic benefit as an acceptable basis for taking private property in condemnation proceedings, which are in many ways analogous to this assessment. In Board of County Commissioners of Muskogee County v. Lowery, supra, Muskogee County attempted to condemn an easement across private land for the purpose of building a water pipeline to serve a privately owned electric generation plant. Much like the stadium in the instant case, there the governing authority asserted “the construction of the plant will serve a public purpose by significantly enhancing the economic development of Muskogee County through increased taxes, jobs and public and private investment.” Id. at ¶ 15. The Lowery Court found that “As a matter of Oklahoma Constitutional and Statutory Law, economic benefit alone is not a public purpose to justify the exercise of the county’s power of eminent domain.” Id. at heading III. The Court elaborated,
“Pursuant to our own narrow requirements in our constitutional eminent domain provisions found at Art. 2, §§ 23 & 24 of the Oklahoma Constitution, we view the transfer of property from one private party to another in furtherance of potential economic development or enhancement of a community… as a purpose, which must yield to our greater constitutional obligation to protect and preserve the individual fundamental interest of private property ownership.” Id. at ¶ 18.
The benefit to assessed properties must be substantial, certain, physical and material. At best any benefit to the assessed properties is remote, speculative, not directly proportional to the amount assessed, and impossible to link directly to the effects of the stadium. Assessments are for physical specific things directly and physically affecting and benefiting the assessed property such as sidewalks, streetlights and sewers. The power of assessment cannot be used for “synergy” to generate overall economic benefit which may or may not ever accrue to a particular piece of property. The assessment against these properties constitutes a taking without just compensation and must be barred.
PROPOSITION V
This assessment district violates the Due Process Clause of Article II § 7 and the 14th Amendment of the Constitution of the United States because the shape of the assessment district in relation to the placement of the stadium is arbitrary and bears no rational relationship to any benefits conferred upon the assessed properties. The boundaries of the Stadium District are drawn arbitrarily and capriciously and do not fairly include all similarly situated properties. The district is roughly rectangular, with the stadium placed literally against the far northern boundary of the district and within a few blocks of the eastern boundary. If one were to take a compass, using the stadium as a center point, and draw a circle around the stadium fully encompassing the improvement district, approximately seventy percent of all the properties located within the circle and in the same proximity to the stadium will fall outside the assessment district and pay nothing toward the cost of the stadium. Id. The entire burden of this assessment district falls upon one quarter of the circle. Properties such as that owned by Plaintiff Better Price Warehouse, located more than a mile from the stadium pay at the exact same rate as properties within the district located across the street from the stadium, while properties directly across the street on the other side of the stadium fall outside the district and pay nothing whatsoever. (Pl. Trial Ex. 5)
In City of Tulsa v. McCormick, 1917 OK 196, 63 Okl. 238, 164 P. 985, the Court held:
An ordinance levying assessments to pay for the cost of constructing certain paving upon the streets of the city of Tulsa which creates arbitrary differences in the property to be assessed without regard to the benefits received and which permits certain property benefited to wholly escape assessment violates section 7, art. 2, Wms. Ann.Const., and the Fourteenth Amendment to the Constitution of the United States.
Id. ¶ 0 (official syllabus no. 3).
The Oklahoma Supreme Court directly addressed this issue in Rollow v. City of Ada, supra,¶ 8: A substantial amount of property, which directly benefited by the improvement district, was selectively excluded from taxation. Only businesses whose property abuts the improvements were assessed. Other businesses which would realize an equal benefit were excluded. The teaching in the City of Lawton is that property may not be included within an improvement district which will not benefit from the district, and that any attempt to assess such property is an arbitrary, oppressive, ultra vires exercise of municipal power. Likewise, it is not within the power of the Legislature to authorize, nor of the city to exclude, property which is directly benefited from the district while increasing the rates for those properties included in the assessment.
The Stadium Assessment District is both over-inclusive and under-inclusive. It includes such property as the BNSF railroad, the Tulsa Day Center for the Homeless, the Salvation Army, and many other non-profit organizations. It equally impacts vacant lots and hotels, restaurants and warehouses, professional office buildings and manufacturing facilities. It also includes many public properties such as the Tulsa County Jail, Tulsa City Hall, the Tulsa Municipal Court, the Tulsa County District Court, the Tulsa County Central Library, the State Office Building, the Convention Center, and the Tulsa County Sheriff’s building, just to name a few. At the same time, it fails to include properties located literally across the street from the stadium.
Because of the arbitrary and capricious designation as to which properties must pay, and which properties wholly escape any obligation, the creation of this assessment district is illegal on its face and in direct violation of the Fourteenth Amendment to the Constitution of the United States, and Article II § 7 of the Oklahoma Constitution. The trial court should be reversed, and the City ordered to refrain from further collections, and to reimburse the sums already taken from owners of assessed properties.
PROPOSITION VI
The trial court erred when it dismissed four of the Plaintiffs for alleged failure to provide proper notice under Statute.
Oklahoma Statutes Title 11, § 39-108 provides as follows in pertinent part: Hearings on creation of district--Protests and objections
A. At the hearing of the governing body on the proposed resolution creating a district, any interested person or owner of property to be assessed for the improvement may file a written protest or objection questioning the:
1. Propriety and advisability of constructing the improvement;
2. Estimated cost of the improvement;
3. Manner of paying for the improvement; and
4. Amount to be assessed against the individual tract or parcel of land….
D. Within thirty (30) days after the governing body has concluded the hearing; determined the advisability of constructing the improvement and the type and character of the improvement; and created the improvement district, any person who, during the hearing, filed a written protest with the governing body protesting the construction of the improvement may commence an action in district court to correct or set aside the determination of the governing body.…
Plaintiffs E & F Cox Family Trust, Michael Samara, T.E. Morlan, and Koenig Properties Inc. each went through extravagant steps to be certain that their written objections were received and heard by the City Council. As the trial court record reflects, on July 7, 2008, prior to the July 10, 2008 hearing, Appellants E & F Cox Family Trust, T.E. Morlan, and Michael Samara filed a written objection to the creation of the assessment district with the City Clerk, and had it hand delivered to each member of the City Council, and sent to the mayor and city attorney as well. Each of these parties sent their attorney to the meeting to orally object on their behalf, and who signed in on their behalf in objection to the adoption of the resolution. The owners of Koenig Properties also made repeated written objections in the form of emails sent to the mayor and city council. Id. at Exhibit C. The court found that because these written objections were filed and delivered to all concerned prior to the hearing, rather than during the hearing, they failed to follow the notice requirements of 11 O.S. § 39-108(D). The Court therefore dismissed them from the lawsuit. (R. 918-920, Order on Motion to Dismiss.)
The court further found a requirement expressed nowhere within the statute that when a party appears to object, the party must state with specificity how the legal title to the property is held or the objection is not valid under the statute. Mr. Edward Cox filed written objection and personally appeared as a property owner and representative of the E. & F. Cox Family Trust which legally held the title. The Court held he did not meet requirements of the statute because he did not specifically state at the hearing that his ownership of the property was through the trust he created and of which he was beneficiary, and because his request to speak form did not mark “against” the resolution. Id.
It is fundamental that the statutes granting municipalities the power to assess property owners must be strictly construed in favor of the property owner. Lance v. City of Sulphur, 1972 OK 145, ¶ 15, 503 P.2d 867; Bonney v. Smith, 1944 OK 149, ¶ 6, 147 P.2d 771; American-First National Bank v. Peterson, 1934 OK 695, ¶ 15, 38 P.2d 957; Pauls Valley National Bank v. Foss, 1924 OK 552, ¶ 0, 226 P. 567. Under the trial court’s interpretation, the statute would be unconstitutionally vague because citizens could not reasonably be expected to understand what measures they must take in order to object to the creation of such an assessment district. This assessment is a staggering $90 million, and yet the trial court proposes that property owners who vigorously objected throughout the process should be denied an opportunity to test the legality of the assessment in Court. These people got an attorney, wrote a written document outlining their objections, filed it with the City Clerk, hand delivered it to every member of the City Council, emailed it to the mayor and city attorney, sent countless emails and appeared at the hearing personally or through counsel. If these actions did not meet the requirement to provide the municipality with sufficient notice of an objection as to preserve their rights under the statute, then an average property owner could not be expected to know what is expected or required.
The trial court erred when it dismissed four of the plaintiffs and denied them their opportunity to participate fully in the litigation and trial of this matter. For this reason, the trial court should be reversed.
PROPOSITION VII
The trial court committed reversible error in the repeated violations of Plaintiffs’ right to due process.
Constitutional questions as to whether procedural due process rights have been violated are subject to a de novo review standard. In the Matter of Turkey Creek Conservancy District, 2008 OK 8, ¶ 3, 177 P.3d 558, Although no scheduling order had ever been entered and many hotly contested discovery issues remained unresolved, the court abruptly entered an order on December 28, 2010 setting the matter for pretrial conference on January 3, 2011 and trial for January 24, 2011 (R. 1564; R. 1565-1574). At that conference Plaintiff protested both that one month was insufficient notice for such a significant trial, that lead counsel for Plaintiff had conflicting felony matters scheduled at the same time, that Plaintiff had never had an opportunity to seek discovery following the court’s ruling on whether there was a question of fact before the court, and that the City of Tulsa had never complied with the requests for production of documents previously submitted. (R.1565-1574; R. 1575-1595 Motion to Compel; R. 1891, Tr. 1/3/2011). The Court overruled these objections. At a status conference prior to trial on 1/20/2011 Plaintiff’s counsel renewed these objections and informed the court that the City had just dumped approximately 35,000 to 50,000 pages of documents on Plaintiff, which could not possibly be reviewed in the few days prior to trial. (R. 1892, Tr. 1/20/2011.) The trial court overruled these objections and trial commenced on January 24, 2011.
At trial the Court refused to allow Plaintiff to call certain property owner witnesses to testify as to the effect of the stadium, and the lack of benefit received. (R. 1885, Tr. Vol 1, p. 129-131). The Court refused to allow Plaintiff to cross-examine adverse parties and witnesses who were called in Plaintiff’s case in chief. (R. Tr Vol II, p. 295, line 13-21.)
The trial court’s actions constitute a denial of substantive due process, and the court should be reversed. Wolfenbarger v. Hennessee, 1974 OK 38, 520 P.2d 809; Nelson v. Nelson, 1998 OK 10, 954 P.2d 1219. An abuse of judicial discretion is manifested when discretion is exercised to an end or purpose not justified by, and clearly against, reason and evidence. Patel v. OMH Medical Center Inc., 1999 OK 33, ¶ 20, 987 P.2d 1185, cert. denied 528 U.S. 1188, 120 S. Ct. 1242, 146 L. Ed. 2d 100 (2000).
PROPOSITION VIII Exclusion from the assessment of property owned by religious organizations constitutes an impermissible support of religion in violation of the First Amendment to the United States Constitution,
The Stadium Assessment District excludes “property owned by a religious organization and used primarily for religious purposes.” This language comports with 11 O.S. § 39-104 which provides in relevant part:
The district shall include, for the purpose of assessment, all the property which the governing body determines is benefited by the improvement or improvements, including property utilized for public, governmental, burial, or charitable purposes, except property of any religious organization used primarily for religious purposes, or of the United States, or any agency, instrumentality or corporation thereof, in the absence of consent of Congress… [emphasis added]. This provision went into effect in 2003, and modified the previous statute which had stated just the opposite, that the district should include property utilized for public, governmental, burial, charitable or religious purposes. The Legislature passed this amendment following an opinion by the Oklahoma Attorney General (1982 OK AG 142) stating that assessment districts must include the property of churches when such property was benefitted by the improvement. In passing the amendment to exclude the property of religious organizations used primarily for religious purposes, the Legislature failed to recognize that § 39-104 as previously written simply reflected constitutional necessity. The main reason such property had to be included was not so much because of the language of § 39-104, but because of the fundamental constitutional issues arising out of the exclusion of such property. The statute was originally written to be in compliance with the Constitution, a fact overlooked by the Legislature when it changed the language to have the opposite result. Both the Tulsa ordinance at issue, and 11 O.S. § 39-104 are in violation of the First Amendment of the United States Constitution.
The United States Supreme Court expressly addressed this issue and held that the exclusion of property owned by a church or religious organization amounts to an impermissible support of religion in violation of the United States Constitution. Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (1989). The Court found that “when...government directs a subsidy exclusively to religious organizations that is not required by the Free Exercise Clause of the First Amendment and that either burdens nonbeneficiaries markedly or cannot reasonably be seen as removing a significant state-imposed deterrent to the free exercise of religion, it cannot be viewed as anything but impermissible state sponsorship of religion” Texas Monthly, 489 U.S. at 2. “Every tax exemption constitutes a subsidy that affects non-qualifying taxpayers, forcing them to become ‘indirect and vicarious donors.’” Id. at 14 (quoting Bob Jones University v. United States, 461 U.S. 574, 591 (1983)). Texas Monthly comes well after Walz v. Tax Commission of City of New York, 397 U.S. 664, 90 S. Ct. 1409 (1970), in which the U.S. Supreme Court held that it was permissible to exempt churches along with other non-profit organizations from property taxes. Aside from the point that an assessment is an apportioned cost for a mutual benefit received, and not a tax, the fact is, the amendment to the statute only excludes religious organizations from assessment, and does not also exclude other not for profit organizations.
In Lemon v. Kurtzman, 403 U.S. 602, 29 L. Ed. 2d 745, 91 S. Ct. 2105 (1971), the Court said the enactment must have a secular purpose, the primary effect of which can neither advance nor inhibit religion. A statute that specifically exempts religious organizations from paying their fair share of the cost of an improvement can have no secular purpose, nor can it be denied that it advances religion.
In the case at hand, the City of Tulsa has specifically excluded from the assessments “property owned by a religious organization and used primarily for religious purposes.” The benefit supposedly derived from the assessment is overall economic prosperity and increased property values. That “benefit” if it truly exists, would flow as much to the churches as it flows to the county jail, the state office building, the library, the railroad, the Salvation Army, and all the many other properties in the district currently required to pay the assessment. If a church benefits from the improvement, then the church must pay its fair share the same as everyone else.
For example, if the city were to install a street light at a corner thereby illuminating four properties, the city could then assess each of the benefitted properties 25% of the cost of the light. If one of the four properties was a church, however, the present statute requires that although the church receives the same benefit, it may not be assessed the cost. Instead the church’s share of the cost falls to the remaining three properties which must now pay 33% instead of 25% of the cost of the streetlight. It requires the remaining three properties to pay the church’s share of the improvement and thereby subsidize the church.
If the costs attributable to the stadium and the “services” fund are equally divided among the benefitted properties, then the exclusion of all of the church property within the assessment district means that each of the other properties are being forced to subsidize the churches. There are two reasons why it would not correct the issue to simply order that the churches be forced to pay the same rates as the other property owners. The first is that with the addition of significant additional square footage into the assessment district, the cost share per property should go down. Just as in the example above, it would not correct the situation to then charge the church 33% of the cost of the corner street light. Rather, the cost must be reapportioned to recognize the inclusion of additional properties to share the burden. The second reason that the Court cannot simply order the churches to begin paying is that such an order would deny the churches due process and the opportunity to engage in the legal and political process to determine whether such an assessment is appropriate.
The exclusion from the assessment of property owned by religious organizations violates the First Amendment of the United States Constitution, and therefore the assessment must be declared unconstitutional.
PROPOSITION IX
The trial court lacked jurisdiction to issue an award of attorneys’ fees and costs to the city and Intervenors after the Petition in Error had been filed, and furthermore, such an award is against statute and violates public policy. The Petition in Error for this appeal was filed on March 23, 2011. On August 10, 2011, the trial Court entered an Order granting an award of certain attorney’s fees and costs to Defendant and Intervenors. (R. 1926-1928). Supreme Court Rule 1.37 expressly delineates the matters in which the trial court retains jurisdiction. A court only retains jurisdiction for attorney’s fees in a matrimonial matter. The trial court lacked jurisdiction to enter its Order of August 10, 2011.
Not only did the trial court lack jurisdiction, but its ruling is contrary to well established law. The issue of attorneys fees and costs has been briefed not once but twice in the District Court. (R. 1757-1760, 1782-1783, 1807-1814). Each time Plaintiffs have demonstrated that there is no statutory authority for an award of attorneys’ fees or costs of litigation. See Dulan v. Johnston, 1984 OK 44, 687 P.2d 1045 and Boston Avenue Management v. Associated Resources Inc., 2007 OK 5, 152 P.3d 880. It is particularly shocking and against public policy to award attorneys and costs to a City in a case such as this when the Plaintiffs are property owners who merely sought declaratory judgment as to the constitutionality of a $90 million assessment against their properties. Plaintiffs have been dragged through expensive and grueling litigation in the trial court just to get a decision on the legal questions presented. Plaintiffs did nothing whatsoever to increase the cost of litigation, but repeatedly asked the court to decide the questions of law. See Plaintiffs’ Motion for Summary Judgment (R. 215-600); Plaintiff’s Second Motion for Summary Judgment, 12/8/10 (R. 1524-1533); Oral Arguments of Counsel (tr. 9/29/10 R. 1890, and tr. 1889 08/30/10); and Plaintiff’s Proposed Order of Questions for the Court 12/8/10 (R. 1534-1538).
An award of attorneys’ fees and costs against such a Plaintiff would clearly have a chilling effect against any citizen or property owner who may wish to challenge governmental action. Citizens must be free to seek a ruling from the Courts about the legality of a statute or ordinance without the terror that they will not only be subjected to lengthy and abusive litigation, but that as punishment for daring to seek review by the court they themselves may be forced to pay the fees and costs of the governmental entity or any party choosing to intervene on behalf of that entity. See Crutchfield v. Marine Power Engine Co., 2009 OK 27, ¶ 26, 209 P.3d 295 (“Exceptions to [the American] rule are narrowly defined because attorney fee awards against the non-prevailing party have a chilling effect on open access to the courts.”).
Outcome: A multipurpose baseball stadium and concert venue is inherently a general improvement for the use and enjoyment of the City at large. If a City is allowed to assess a one and a half square mile area $60 million to build such an undertaking, then there is no limit to what a city might assess from whom or for what purpose. Equally egregious is the City’s assessment of $30 million for no stated purposes whatsoever other than a broad suggestion that the funds would go to unspecified “services.” The Supreme Court has repeatedly held that the preservation of private property interests is of paramount constitutional concern. There are lawful processes by which a municipality may finance large projects such as a ballpark, but assessment isn’t one of them. For the reasons stated above, the assessment by the City of Tulsa under the Tulsa Stadium Improvement District No. 1 is contrary to both state and federal law. The trial court should be reversed. The resolution creating the Tulsa Stadium Assessment district should be declared an ultra vires act and void ab initio, and the City should be ordered to cease taking action in furtherance of the assessment in question, and to reimburse the funds collected thus far.
Plaintiff's Experts:
Defendant's Experts:
Comments: