Valero Mktg. & Supply Co. v. United States

Decision Date06 November 2019
Docket NumberNO. 5:19-CV-328-DAE,5:19-CV-328-DAE
Citation422 F.Supp.3d 1206
Parties VALERO MARKETING AND SUPPLY COMPANY, Plaintiff, v. UNITED STATES of America, Defendant.
CourtU.S. District Court — Western District of Texas

Andrew Lewis Howlett, George A. Hani, Adam P. Feinberg, Miller & Chevalier Chartered, Washington, DC, for Plaintiff.

Andrew L. Sobotka, Jonathan L. Blacker, Michael W. May, Steven C. Woodliff, U.S. Department of Justice, Dallas, TX, for Defendant.


David A. Ezra, Sr. United States District Judge

The matter before the Court is Defendant United States of America's Amended Motion to Dismiss. (Dkt. #11.) A hearing was held on this matter on November 5, 2019. After careful consideration of the memoranda filed in support of and in opposition to the motion, as well as arguments of counsel at the hearing, the Court, for the following reasons, DENIES the motion.


On April 1, 2019, Valero Marketing and Supply Company ("Valero") filed suit in this Court against the Government. (Dkt. # 1.) Valero's complaint seeks a tax refund of over $121 million for the first quarter of the tax year 2015 ("disputed tax period"). (Id. ) According to Valero, on April 30, 2015, it timely filed a Quarterly Federal Excise Tax Return ("Form 720") for the disputed tax period—January 1, 2015, through March 31, 2015, with the Internal Revenue Service ("IRS"). The Form 720 reported a total 26 U.S.C. § 4081 (" section 4081") fuel excise tax in the amount of $565,025,097 for the disputed tax period, which Valero timely paid.

Several years later, on April 26, 2018, Valero filed an Amended Quarterly Federal Excise Tax Return ("Form 720X") for the disputed tax period with the IRS, claiming a refund of the section 4081 fuel excise tax in the amount of "$4.00 Plus," plus statutory interest. Valero contends this refund claim is based on Alternative Fuel Mixture Credits that it had not previously claimed on its original Form 720 for the disputed tax period.

On April 1, 2019, Valero filed this suit on the basis that more than six months have passed since it filed the Form 720X seeking the refund, and that the IRS has neither paid nor denied the refund request for the disputed tax period. (Dkt. # 1.) Valero contends that it is entitled to a refund for the overpayment it made to the IRS, but the Government has refused to recognize that several substances qualify as "alternative fuels" for tax credit purposes. (Id. )

On July 22, 2019, the Government filed an Amended Motion to Dismiss Valero's claims pursuant to both Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure.1 (Dkt. #11.) Valero filed a response in opposition on August 5, 2019 (Dkt. # 12); the Government filed a reply on August 16, 2019 (Dkt. # 15).

A. Rule 12(b)(1)

A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure challenges a federal court's subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). Under Rule 12(b)(1), a claim is properly dismissed for lack of subject matter jurisdiction when a court lacks statutory or constitutional authority to adjudicate the claim. Home Builders Assoc. of Mississippi, Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998). When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, courts should consider the "jurisdictional attack before addressing any attack on the merits." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001). The Court must first address subject matter jurisdiction because, without it, the case can proceed no further. Ruhrgas Ag v. Marathon Oil Co., 526 U.S. 574, 583, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) ; Ramming, 281 F.3d at 161.

In considering a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, "a court may evaluate (1) the complaint alone, (2) the complaint supplemented by undisputed facts evidenced in the record, or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Den Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420, 424 (5th Cir. 2001) (citation omitted).

B. Rule 12(b)(6)

Federal Rules of Civil Procedure 12(b)(6) authorizes dismissal of a complaint for "failure to state a claim upon which relief can be granted." When analyzing a motion to dismiss for failure to state a claim, the court "accept[s] ‘all well pleaded facts as true, viewing them in the light most favorable to the plaintiff.’ "

United States ex rel. Vavra v. Kellogg Brown & Root, Inc., 727 F.3d 343, 346 (5th Cir. 2013) (quoting In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) ). The court "must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a Court may take judicial notice." Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011) (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) ).

To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "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." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). However, a court reviewing a complaint "[is] not bound to accept as true a legal conclusion couched as a factual allegation." Id. "A Rule 12(b)(6) motion to dismiss for failure to state a claim is an appropriate method for raising a statute of limitations defense." Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir. 1977).


The Government moves to dismiss Valero's claims on the basis that the Court lacks subject matter jurisdiction because the suit is barred by several defenses including sovereign immunity and the doctrine of variance. (Dkt. #11.) The Government contends that Valero has not duly filed a document that qualifies as the requisite administrative claim for refund. (Id. ) The Government also moves to dismiss Valero's claims on the basis that Valero has failed to state a plausible claim for relief. (Id. )

I. Rule 12(b)(1) Motion
A. Sovereign Immunity

"The United States, as sovereign, is immune from suit save as it consents to be sued." Schaeffler v. United States, 889 F.3d 238, 242 (5th Cir. 2018) (quoting United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941) ). The United States has consented to be sued for "erroneously or illegally assessed or collected" taxes. 28 U.S.C. § 1346(a)(1). However, a plaintiff must comply with the requirements in 26 U.S.C. §§ 7422, 6532, and 6511. See id.; United States v. Dalm, 494 U.S. 596, 601, 110 S.Ct. 1361, 108 L.Ed.2d 548 (1990) ("Despite its spacious terms, § 1346(a)(1) must be read in conformity with other statutory provisions which qualify a taxpayer's right to bring a refund suit upon compliance with certain conditions. The first is § 7422(a), which ... limits a taxpayer's right to bring a refund suit."); see also 26 U.S.C. § 6532(a) (imposing additional conditions on suits brought under § 7422(a) ).

Under § 7422(a), before a taxpayer can bring a refund suit, the taxpayer must first fully pay the assessed tax and file an administrative claim for refund with the IRS. See 26 U.S.C. § 7422 ; see also United States v. Williams, 514 U.S. 527, 532-33, 115 S.Ct. 1611, 131 L.Ed.2d 608 (1995). A claim for refund "must set forth in detail each ground upon which a credit or refund is claimed and the facts sufficient to apprise the Commissioner of the exact basis thereof." Treas. Reg. § 301.6402-2(b)(1).

Pursuant to 26 U.S.C. § 6532(a)(1), "no suit or proceeding under section 7422(a) for the recovery of any internal revenue tax, penalty, or other sum, shall be begun before the expiration of 6 months from the date of filing the claim required under [ section 7422 ] unless ... a decision [is rendered] within that time." In other words, only after the IRS has rendered a decision, or has not acted upon the claim for six months, does the federal district court have subject matter jurisdiction. See 26 U.S.C. §§ 6532(a), 7422 ; see also Flora v. United States, 362 U.S. 145, 80 S.Ct. 630, 4 L.Ed.2d 623 (1960). Under § 6511(a), a claim for a tax refund "shall be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid," whichever is later. 26 U.S.C. § 6511(a). A taxpayer's failure to comply with time limitations deprives the Court of subject matter jurisdiction. See Duffie v. United States, 600 F.3d 362, 384 (5th Cir. 2010).

B. Whether Valero's Claim for Refund was a Formal Claim

The Government's main basis for relief in its motion to dismiss is that Valero's amended return—Form 720X—was not a formal claim for refund because it was never perfected. Thus, the Government argues that the claim is not properly before the Court, and the Court therefore lacks subject matter jurisdiction. (Dkt. # 11 at 10.) While acknowledging that the Form 720X was the correct form for Valero to seek a refund for an alternative fuel mixture credit, the Government argues that the form was incomplete and inadequate because it did not have the numbers of gallons of products allegedly blended and the amount of the refund being sought. (Id. )

Indeed, Valero's amended return does not state that Valero seeks a $121,999,109 Alternative Fuel Mixture Credit; instead, the form states only that it seeks an adjusted credit for "$1.00 Plus" on four different lines. (Id.; see Dkt. # 11-1 at 4.) Thereafter, the amount for "Total adjustments" states "$4.00 Plus." (Dkt. # 11-1 at 4.) However, the amended return has an attached ...

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