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Supreme Court Decision Update - Limtiaco v. Camacho

guam.gifThe first of today’s two Supreme decisions, Limtiaco v. Camacho (PDF of the opinion), comes from Guam. It’s about how that cute little territory of ours should figure out its debt limitations (that is, the amount of debt it’s allowed to get into by issuing bonds.

QuizLaw Analysis: The boring part of the decision is this - Guam must calculate its debt limits by figuring out the “assessed value” of property, not the “appraised value” of property (which is a much higher value, in general). The cool part of this decision is that this is the first time I’ve ever seen the word “Guamanians” in print, and that’s just a solid word. So thanks for that, Justice Thomas.

Guam? Yes, Guam.

And what of Guam? Well in 2003, Guam found itself in financial trouble, unable to meet its debt obligations. So the Guam Legislature authorized bonds of about $400 million in total value. The Governor signed the law and was ready to issue the bonds, but the Guam attorney general stuck her nose into things. She refused to approve the government contracts necessary for these bonds because she thought the bonds would violate the Guam Organic Act, which limits the amount of debt Guam can get itself into (no more than 10% “of the aggregate tax valuation of the property in Guam”).

So the Governor asked the Guam Supreme Court to say that the bonds wouldn’t actually violate this Act. The Governor argued that “aggregate tax valuation” meant the appraised valuation of property, while the AG argued that it meant the assessed valuation of property (which would be much less than the appraisal value because “Guam assesses property at 35 percent of its appraised value). The Guam Supremes took the Governor’s side, and the AG ran off to appeal to the Ninth Circuit.

Here things get messy from a procedural standpoint. The Guam Organic Act gave the Ninth Circuit jurisdiction over appeals from the Guam Supreme Court. However, while this case was pending before the Ninth Circuit, Congress amended the Act and took that jurisdictional language out. The Ninth Circuit addressed this issue in a 2006 opinion, Santos v. Guam, and said Congress had not just taken away its jurisdiction prospectively, “but also for pending appeals.” So the Guam AG’s appeal was dismissed, because the Ninth said it no longer had jurisdiction. This created a new problem because, under federal law, a petition for certiorari with the Supremes has to be filed within 90 days of when the lower judgment was entered. But since the case was pending with the Ninth for so long, the AG ended up filing her petition well more than 90 after the Guam Supremes entered their judgment.

So, there are actually two issues at play here. There’s the procedural question of whether that 90-day period was put on hold while the appeal was pending with the Ninth, and there’s also the substantive question of how tax valuation should be handled under this Guam debt-limitation requirement.

So who’s on what side here? Well the main opinion was penned by Justice Thomas. One part of his decision, pertaining to the 90-day procedural issue, is unanimous. The rest of his opinion is not, but he’s still got the majority, joined by Chief Justice Johnny, The Scalia and Justices Kennedy and Breyer. Justice Souter filed a second opinion, concurring in part, and dissenting to the rest, and he was joined by Justices Stevens, Ginsburg and Alito.

Let’s get the unanimous bit out of the way - what does everyone think about that 90-day window? It’s pretty simple:

The Guam Supreme Court’s judgment did not become final, for purposes of this Court’s review, until the Ninth Circuit issued its order dismissing the appeal.

When the Ninth originally took the appeal, there was suddenly a possibility that the Guam Supreme’s decision could be changed or reversed, and that possibility suspended the finality of the Guam judgment. Only once that appeal was dismissed did the Guam judgment really become final, so the 90-day clock started running in March 2006, when the Ninth tossed the case because of Congress’ amendment of the Act.

It’s also worth noting that Thomas goes out of his way to “emphasize that our holding is limited to the unique procedural circumstances presented here. Specifically, our holding does not extend to improperly filed appeals or filings used as delaying tactics.”

And with that out of the way, the Justices divide on the question of how Guam tax valuation works? Correct. Again, the issue is what “tax valuation” means. Thomas says you should use assessed property valuation in calculating the Guam debt limitation, which is the losing argument the AG made to the Guam Supremes. Thomas and company say that “tax valuation” usually means the value which is used for applying the tax rate, and that means “assessed” value, because “assessed valuation” is “consistently defined as a valuation of property for tax purposes.” The Governor and Guam Supremes’ “appraised value” is just the market value, which has nothing to do with taxation. And so that’s that.

Now the Guam Supremes also noted that a similar debt-limitation provision for the Virgin Islands specifically used the language of “assessed valuation,” and since the Guam Act doesn’t use this specific language, the Guam Supremes ruled that Congress meant for Guam to use something other than “assed value.” Thomas says no because “if Congress had meant actual, market, or appraised value, it could have used any one of those terms as well…[o]r it could have left the word ‘valuation’ unmodified.”

Thomas also says that this decision comports with how most States handle the debt limitations they place on municipalities, also tying those limitations to assessed property values.

Finally, the Guam Governor argued that the Supremes should give deference to the Guam Supreme’s interpretation of the Act, but Thomas says that’s bunk: “It may be true that we accord deference to territorial courts over matters of purely local concern. [citation] This case does not fit that mold, however,” because the debt-limitation provision of the Act also protects the U.S., not just Guam, so “this case is not a matter of purely local concern.”

So what’s up Justice Souter’s rump? Well remember, he does concur in part, because he agrees that the writ of certiorari was timely filed. But he thinks Thomas is wrong in saying that “tax valuation” here must mean “assessed value.” He basically says that, yet again, Thomas and The Scalia (and their cohorts) have unnecessarily constrained themselves by looking mainly at statutory language:

If I could not go beyond statutory text and the sources relied upon by the Court, a coin toss would be my only way to judgment. But I look to congressional purpose, which points to appraised value as the meaning of the term, leaving me in respectful dissent.

Basically, Souter and Company think that “tax valuation” can reasonably be interpreted either as “assessed value” or “appraised value.” He thinks it’s silly to look at other territories, because of differences between Guam and those other territories, and that it’s also silly to look at what the states do, because our Congress may not have the same understanding of the term “valuation” as state legislatures. However, Souter says that “the purpose of the legislation” is very insightful on this issue, as it “makes clear that what Congress meant to provide was a practical guarantee against crushing debt on the shoulders of future generations, and insolvency with the inevitable call for a bailout by Congress.”

And Souter thinks the Governor’s approach, using appraised value, fits better with this purpose. Using “assessed value” leaves a “specter of mischief” because “the Guam Legislature could double the debt limitation without increasing taxes by a single penny, simply by doubling the assessment rate and cutting the tax rate by half.” But the market value of property reflects what Guam has the ability to collect in taxes, and it’s a true economic index that can’t be toyed with as in Souter’s “specter of mischief” example.