Judge: Federal court not right place for homeowner's tax assessment discrimination claims vs Cook assessor

By Scott Holland | Sep 27, 2018

A federal judge has dismissed a lawsuit brought by a former Chicago Heights homeowner, who claimed he and other homeowners in poor and minority neighborhoods in Cook County were forced to pay more than they should in property taxes because, he said, Cook County Assessor Joseph Berrios inflated the taxable value of homes in those neighborhoods.

U.S. District Judge Rebecca Pallmeyer issued an opinion Sept. 25 in Chicago, noting former Cook County resident Edward Hadnott is not alone among those pursuing legal action over the county’s property assessment operation. But the judge said his dispute is precluded as a federal matter by the Tax Injunction Act.

Pallmeyer referenced a complaint filed in Cook County Circuit Court in December against Berrios by the Brighton Park Neighborhood Council and Logan Square Neighborhood Association alleging county assessment practices discriminated against Hispanic and black homeowners by under-assessing properties in wealthier and whiter neighborhoods and communities, pushing a greater tax burden on those with less means to legally protect themselves.

Both actions follow in the wake of reports published by the Chicago Tribune and ProPublica finding alleged discrepancies in the way Berrios’ office assessed properties, revealing a purported pattern of over-assessing property in poorer neighborhoods and communities, while under-assessing homes and commercial property in wealthier areas. That series also noted Berrios’ system enriched politically connected lawyers specializing in property tax assessment appeals, including law firms headed by Illinois House Speaker Michael Madigan and Chicago Alderman Ed Burke.

Cook County Assessor Joseph Berrios  

While declining to comment on the Brighton Park litigation directly, a spokesman for Berrios has said the assessor's office stands by its assertion "property assessment in Cook County is done correctly and fairly."

Hadnott, who represented himself in his lawsuit against the county assessor, said his single-family home in Chicago Heights, which he sold Nov. 27, had a total assessment of $36,420, including $18,000 for the land. He said those figures from the county “over-assessed the land by 600 percent” and the total value by 233 percent. He said he appealed the assessment annually for five years, unsuccessfully, ultimately selling the house for $15,500.

In his complaint, filed Oct. 17, Hadnott cited assessments for homes in Winnetka he says were far below market value, asserting the discrepancies violate his federal and state equal protection rights.

“The factual assertions underlying these claims are a bit thin,” Pallmeyer wrote, adding Hadnott had no support for the claim of conspiracy between Berrios and tax attorneys. He sought punitive damages of $5 million and $10 million for “other minority tax payers in Cook County” for the overpayment of taxes and loss of property value over 30 years.

In saying her court was not the proper venue for Hadnott’s complaint, she invoked the U.S. Supreme Court’s comity doctrine, which holds “district courts should abstain from hearing suits that deal with state taxation” when adequate remedies exist in state courts, and said Hadnott didn’t explain in his complaint why the appeals or Cook County Board of Review processes are insufficient.

Pallmeyer further detailed the federal Tax Injunction Act, which limits federal court jurisdiction on state law tax assessments, levies and collections. She said Hadnott claimed his case falls under two TIA exceptions, but rejected both of those theories, explaining his case was different from those because he is not a third-party plaintiff, but “alleges a personal injury and requests individualized relief,” and also that he isn’t pursuing a tax refund claim, which he claims is allowed under the TIA.

Though making it clear Hadnott seeks damages, not a refund, Pallmeyer reiterated how “state taxation challenges claiming constitutional violations do not fall outside the TIA’s purview.” She said the U.S. Seventh Circuit Court of Appeals has consistently rejected arguments that complaints like Hadnott’s are about unconstitutional actions and not the tax itself.

In dismissing Hadnott’s federal claims, Pallmeyer also formally relinquished jurisdiction over the remaining state law claims, noting again the ongoing challenge to the county’s property tax system.

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