Austin & Laurato, P.A. v. United States, 13-10440
| Decision Date | 24 September 2013 |
| Docket Number | No. 13-10440,D.C. Docket No. 8:12-cv-01648-EAK-AEP,13-10440 |
| Parties | AUSTIN AND LAURATO, P.A., SISCO-LAW, P.A., Plaintiffs - Appellants, v. UNITED STATES OF AMERICA, Defendant - Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
[DO NOT PUBLISH]
Appeal from the United States District Court
for the Middle District of Florida
Before BARKETT, MARCUS and HILL, Circuit Judges.
Two law firms, Austin and Laurato, P.A. and Sisco-Law, P.A. (collectively, "the Firms") appeal from the district court's order dismissing their wrongful levycivil action against the United States for lack of subject matter jurisdiction. The district court concluded sua sponte that the Firms lacked Article III standing, and also agreed with the government that dismissal was warranted because the Firms failed to bring their wrongful levy action within the nine month limitations period prescribed by Congress in 26 U.S.C. § 6532(c). The district court further denied as futile the Firms' request to amend their complaint to include a procedural due process claim.
After thorough review, we affirm. The Firms do not have a specific possessory interest in, or valid lien on the funds levied by the IRS, and therefore lack standing to bring this action. Moreover, the district court correctly concluded that amendation of the Firms' complaint would have been futile.
Because this case was dismissed at the pleading stage, we take the facts alleged in the Firms' complaint to be true, and draw all reasonable inferences in favor of the Firms. See Williams v. Mohawk Indus., 465 F.3d 1277, 1281 n.1 (11th Cir. 2006). In July 2010, the City of Tampa seized funds from individuals and entities in connection with a criminal matter. In August 2010, Austin and Laurato, P.A. entered into a contingency fee contract with Michelle Gonzalez and First Medical Group to represent them in a civil action seeking the return of the seized funds; Sisco-Law, P.A. entered into a similar contingency fee contract withJorge M. Gonzalez-Betancourt. The two law firms brought suit in Florida circuit court on behalf of their clients pursuant to the Florida Contraband Forfeiture Act, Fla. Stat. § 932.701 et seq. In re Forfeiture of Two Hundred Twenty-One Thousand Eight Hundred Ninety-Eight Dollars ($221,898.00) in U.S. Currency, No. 10-CA-1620, Circuit Court of the Thirteenth Judicial Circuit, Hillsborough County, Florida.
The Firms were largely successful in their state court action. After an adversarial probable cause hearing, the state trial judge ordered the City of Tampa to return the funds to the claimants. This order was later summarily affirmed by Florida's Second District Court of Appeals. In re Forfeiture of Two Hundred Twenty-One Thousand Eight Hundred Ninety-Eight Dollars ($221,898.00) in U.S. Currency, 64 So. 3d 683 (Fla. 2d Dist. Ct. App. 2011). However, the clients never recovered the funds. On August 27, 2010, two days after the state trial court entered its order, the IRS served a Notice of Levy upon the City of Tampa, seeking possession of the seized funds to satisfy the outstanding federal tax liability of Jorge M. Gonzalez-Betancourt. In June 2011, the City of Tampa transferred the seized funds to the United States Attorney for the Middle District of Florida, who in turn transferred the funds to the IRS.
After this transfer, the state trial court denied the claimants' pending motion for release of the seized funds as moot because the funds had been turned over tothe IRS. The court wrote in its August 2011 order that "Claimants' remedies are through the internal processes of the I.R.S. or the United States District Court." The Firms also attempted to recover the funds outside of court, sending a letter to the U.S. Attorney for the Middle District of Florida, on behalf of both firms and their clients, seeking return of the moneys; according to the Firms, they never received a reply from the U.S. Attorney's Office.
It wasn't until almost a year later, in June 2012, that the Firms wrote the Internal Revenue Service, unsuccessfully seeking a meeting with the revenue officer who was assigned to the taxpayers' case. In June and July 2012, the Firms wrote to the Taxpayer Advocate Service, requesting assistance from the office and again demanding the return of the seized funds. Soon thereafter, the Firms received a letter from the Taxpayer Advocate Service denying their request for assistance and indicating that the only recourse they had was to file a lawsuit.
The Firms then brought this wrongful levy action in the United States District Court for the Middle District of Florida. See 26 U.S.C. § 7426(a)(1) (). Notably, the Firms are notrepresenting their state court clients in this action; rather, the Firms are the plaintiffs, as they attempt to avail themselves of the priority afforded by the Internal Revenue Code to attorney's liens against a judgment or settlement. See 26 U.S.C. § 6323(b)(8).
The government moved to dismiss because the Firms failed to bring their wrongful levy suit within the nine-month limitations period prescribed in the governing statute, 26 U.S.C. § 6532(c) (). There is no dispute that the date of the levy was August 27, 2010, and the date the suit was commenced was July 24, 2012, nearly two years later. The district court agreed with the government that the suit was untimely and, therefore, that because limitations periods against the United States involve the federal government's waiver of sovereign immunity, the district court lacked subject matter jurisdiction over the action. The district court also concluded it lacked subject matter jurisdiction based on its sua sponte determination that the Firms lacked standing because they had no legally protected interest in the levied funds. Finally, the trial court dismissed the cause with prejudice, finding that an amendment adding a due process claim would have been futile.
The Firms moved for reconsideration. The district court agreed to hear additional argument on the jurisdictional issues, but again rejected the Firms' position and left its original order intact. This timely appeal followed.
We review a district court's determination that it lacked subject matter jurisdiction, including its standing determination, de novo. See Cmty. State Bank v. Strong, 651 F.3d 1241, 1251 (11th Cir. 2011); Dermer v. Miami-Dade Cnty., 599 F.3d 1217, 1220 (11th Cir. 2010); Bochese v. Town of Ponce Inlet, 405 F.3d 964, 975 (11th Cir. 2005). In addition, "[a]lthough we review a district court's denial of a motion to amend only for abuse of discretion, we review de novo a decision that a particular amendment to the complaint would be futile." Cockrell v. Sparks, 510 F.3d 1307, 1310 (11th Cir. 2007).
We agree with the district court that the Firms lacked standing to commence this action. An essential prerequisite to a federal court's power to entertain a suit is an Article III case or controversy. "It is by now axiomatic that a plaintiff must have standing to invoke the jurisdiction of the federal courts." KH Outdoor, LLC v. City of Trussville, 458 F.3d 1261, 1266 (11th Cir. 2006). It is also abundantly clear that the plaintiffs bear the burden of establishing each of the three elements comprising constitutional standing: injury in fact, causation, and redressability. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992); Elend v.Basham, 471 F.3d 1199, 1206 (11th Cir. 2006). Although the government had not moved to dismiss on standing grounds, the district court correctly determined that it was "obliged to consider questions of standing regardless of whether the parties have raised them." Bochese, 405 F.3d at 975.
It is the first of the standing requirements -- injury in fact -- that ends the inquiry in this case. An injury in fact is an invasion of a legally protected interest that is "concrete and particularized" and "actual or imminent, not conjectural or hypothetical." Lujan, 504 U.S. at 560 (internal quotation marks omitted). To establish an injury in fact, then, the plaintiff must demonstrate that it has a "legally protected interest" that has been harmed. Bochese, 405 F.3d at 980. When a claim is based on a federal statute, "the inquiry as to standing must begin with a determination of whether the statute in question authorizes review at the behest of the plaintiff." Sierra Club v. Morton, 405 U.S. 727, 732 (1972).
The Firms bring their claims under the third party wrongful levy statute, 26 U.S.C. § 7426. An IRS tax levy is only a provisional remedy, and "the priority of interests in the seized property is determined in a Section 7426 wrongful levy action after the levy is executed." Capuano v. United States, 955 F.2d 1427, 1429 (11th Cir. 1992). But not just anyone can challenge the administrative levy; indeed, the text of the statute permits suit only by a person who "claims an interest in or lien on" the property at issue. 26 U.S.C. § 7426(a)(1). Not surprisingly,numerous appellate courts have held that standing to bring a claim under the wrongful levy statute requires a specific and legally cognizable interest in the property levied upon. More precisely, these courts have held, and we agree, that "the right of a third party to challenge a wrongful levy is confined to persons who have a fee simple or equivalent interest, a possessory interest, or a security interest in the property levied upon." Frierdich v. United States, 985 F.2d 379, 383 (7th Cir. 1993);...
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