United States District Court, M.D. Tennessee, Nashville Division
A. TRAUGER, UNITED STATES DISTRICT JUDGE
before the court is a Motion to Dismiss (Docket No. 12),
filed by Defendants State of Tennessee and the Tennessee
State Board of Equalization. For the reasons stated herein,
Defendants' Motion is GRANTED, and this action is
Islamic Center of Nashville (“ICN”) filed this
action against the State of Tennessee, the Tennessee State
Board of Equalization, and Charlie Caldwell, alleged to be
the Metropolitan Trustee in Nashville,
Tennessee. Plaintiff alleges that it has, since 1995,
run a religious school in Nashville, called the Nashville
International Academy (“NIA”), on property owned
by ICN and leased by NIA. Plaintiff's Complaint avers
that both ICN and NIA are independently operating, yet
overlapping, 501(c)(3) organizations.
asserts that the Tennessee State Board of Equalization
(“TSBE”) granted limited land use property tax
exemptions to ICN as a religious entity in 1996, pursuant to
Tenn. Code Ann. § 67-5-212(a), which provides an
exemption from property taxation for real property owned by
any religious or nonprofit educational institution that is
occupied and actually used by the institution (or another
exempt institution) purely and exclusively for an exempt
2008, ICN borrowed money to fund construction of a new
building for educational purposes on the subject property.
Because the Islamic faith prohibits the payment of interest,
Plaintiff used a vehicle called an Ijara Agreement
to borrow this money from a subsidiary of Devon Bank. Under
the Ijara Agreement, an entity controlled by Devon
Bank received legal transfer of title of the property until
the payments were complete.
states that payments under the Ijara Agreement were
complete in October 2013, and ICN regained the unencumbered
title to the property at issue. Plaintiff applied for a
property tax exemption regarding the new building in February
of 2014 and sought retroactive application of the exemption
for the time period during which title was held by Devon
Bank. Plaintiff was denied retroactive
application of the exemption but granted the exemption going
forward from October of 2013. Plaintiff appealed that
decision to an Administrative Law Judge, who upheld denial of
the retroactive application. Plaintiff again appealed, this
time to the Tennessee Assessment Appeals Commission, which
held that it was unable to ignore the legal transfer of title
and found against ICN.
Plaintiff seeks redress for the alleged disparate impact of
the application of the tax laws that caused Plaintiff to
suffer harm as a result of compliance with its sincerely held
religious beliefs concerning payment of interest. Plaintiff
alleges causes of action under (1) the Religious Freedom and
Restoration Act (“RFRA”) and its Tennessee
counterpart; (2) the Religious Land Use and Institutionalized
Persons Act (“RLUIPA”); (3) the Elementary and
Secondary Education Act of 1965 (“ESEA”); and (4)
the Establishment Clause of the First Amendment. Plaintiff
seeks money damages, and injunctive and declaratory relief.
Defendants State of Tennessee and TSBE have moved to dismiss
Plaintiff's Complaint on several grounds.
purposes of a motion to dismiss, the court must take all of
the factual allegations in the complaint as true.
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). To
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim
to relief that is plausible on its face. Id. A claim
has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged. Id. Threadbare recitals of the elements of
a cause of action, supported by mere conclusory statements,
do not suffice. Id. When there are well-pleaded
factual allegations, a court should assume their veracity and
then determine whether they plausibly give rise to an
entitlement to relief. Id. at 1950. A legal
conclusion couched as a factual allegation need not be
accepted as true on a motion to dismiss, nor are recitations
of the elements of a cause of action sufficient. Fritz v.
Charter Township of Comstock, 592 F.3d 718, 722 (6th
first argue that this action is barred by the Tax Injunction
Act, which provides: “The district courts shall not
enjoin, suspend or restrain the assessment, levy or
collection of any tax under State law where a plain, speedy
and efficient remedy may be had in the courts of such
State.” 28 U.S.C. § 1341. Because this is a
threshold issue concerning the court's jurisdiction, the
court addresses it first.
Injunction Act has its roots in equity practice, in
principles of federalism, and in recognition of the
imperative need of a State to administer its own fiscal
operations. Colonial Pipeline Co. v.
Morgan, 474 F.3d 211, 217-18 (6th Cir. 2007).
A federal district court is under an equitable duty to
refrain from interfering with a State's collection of its
revenue except in cases where an asserted federal right might
otherwise be lost. Id. at 218. Because the Tax
Injunction Act drastically limits federal district court
jurisdiction to interfere with so important a local concern
as the collection of taxes, a district court does not have
jurisdiction over state and local tax matters where a plain,
speedy and efficient remedy is available in state
court. Id. The Supreme Court has
interpreted and applied the Tax Injunction Act only in cases
in which state taxpayers seek federal court orders enabling
them to avoid paying state taxes. Hibbs v. Winn, 542
U.S. 88, 107 (2004).
here seeks to avoid paying state taxes for the time period
during which title to this property was held by Devon Bank.
Plaintiff challenges the Defendants' determination ...