Bowers v. J & M Discount Towing, LLC.
| Decision Date | 31 October 2006 |
| Docket Number | No. CIV-06-0299 JB/RHS.,CIV-06-0299 JB/RHS. |
| Citation | 472 F.Supp.2d 1248 |
| Parties | Joseph H. BOWERS, Plaintiff, v. J & M DISCOUNT TOWING, LLC, Defendant, v. United States of America, and Internal Revenue Service of the Department of the Treasury, Third Party Defendants. |
| Court | U.S. District Court — District of New Mexico |
Joseph H. Bowers, Albuquerque, NM, Plaintiff pro se.
Don F. Harris, Albuquerque, NM, for the Defendant.
Cynthia Messersmith, Tax Division, United States Department of Justice, Dallas, TX, for the Third-Party Defendants.
THIS MATTER comes before the Court on the Defendant J & M Discount Towing, LLC's Motion to Dismiss Plaintiff's Complaint Against J & M With Prejudice and Memorandum in Support, filed June 28, 2006 (Doc. 12)("Motion to Dismiss"). The Court held a hearing on this motion on October 20, 2006. The primary issues are: (i) whether the Court has subject-matter jurisdiction over the case even though Plaintiff Joseph H. Bowers' Complaint does not, on its face, plead a federal cause of action or raise a federal question; and (ii) whether the Court should dismiss Bowers' Complaint against Defendant J & M Discount Towing, LLC ("J & M"). Because the Court determines that it has subject-matter jurisdiction over this entire case, because the Court determines that Bowers cannot sue J & M for performing towing work on behalf of the Internal Revenue Service, and because Bowers has not presented evidence that he exhausted his administrative remedies before suing the United States for unlawful tax collection, the Court will grant J & M's motion in part and deny it in part.
J & M characterizes Bowers as a tax protester. See Motion to Dismiss at 3. The United States represents that Bowers owes the IRS over $360,000.00 in delinquent taxes for the calendar years 2000, 2001, and 2002. See Brief in Support of J & M Discount Towing, LLC's Motion to Dismiss Plaintiff's Complaint with Prejudice or in the Alternative, for Summary Judgment, filed October 19, 2006 (Doc. 29)("United States' Brief in Support"); Declaration of Dean Chavez ¶ 4, at 2 (executed August 8, 2006)("Chavez Declaration").
In April 2004, in connection with its efforts to collect Bowers's delinquent taxes, the IRS issued a notice of levy on Bowers's BMW automobile. See Chavez Declaration ¶ 9, at 3. On June 29, 2004, the IRS arranged for J & M to tow the automobile to the auction site, which was located on J & M's premises. See id.
In June 2004, Bowers sued Brenda Jones, Dean Chavez, and J & M in the United States District Court for the District of New Mexico, seeking to have the automobile replevied. See Bowers v. Jones, No. CIV-04-0722 PJK/RHS (D.N.M.2004). On November 24, 2004, the Honorable Paul J. Kelley, United States Circuit Judge, sitting by designation, dismissed the matter for failure to prosecute. See id., Order, filed November 24, 2004 (Doc. 4).
On February 16, 2005, the New Mexico Taxation and Revenue Department filed an application in state court for a temporary restraining order, alleging that Bowers was engaged in business as a dentist and periodontist, and seeking to have Bowers enjoined from doing business to compel payment of state taxes. See Sec'y, Taxation & Revenue Dep't v. Bowers, No. D-0101-CV-02005-00359 (First N.M. Dist. Ct.2005). According to documents filed with the state complaint, Bowers owed the State of New Mexico $103,090.87 for the periods April 2001 through July 2004. See Motion to Dismiss, Exhibit A, Application of Injunction from Engaging in Business, ¶ 6, at 2; Exhibit 3, Affidavit of Tax Collector ¶ 5, at 1. The state court entered a stipulated order resolving the matter on October 3, 2005. See Sec'y, Taxation & Revenue Dep't v. Bowers, No. D-0101-CV-02005-00359, Docket, available at http:// www.nmcourts.com/caselookup/search.htm.
On November 11, 2005, Bowers initiated this case by filing suit against J & M, alleging a state-law conversion claim related to the towing, detention, and sale of his vehicle. See Bowers v. J & M Discount Towing, LLC, No. D-0202-CV-2005-08419 (Second N.M. Jud. Dist. Nov. 11, 2005). Bowers alleged J & M towed his automobile, and allowed it and the personal contents in the car to be sold "without any lawful claim against plaintiff or the vehicle." See id., Complaint ¶ 4, at 1 ("Bowers' Complaint"). J & M contends that it lawfully towed the car at the request of the IRS, which was enforcing a levy to collect delinquent taxes from Bowers. See Motion to Dismiss at 6.
J & M filed a third-party complaint against the United States on March 10, 2006. See Bowers v. J & M Discount Towing, LLC, No. CV-2005-08419, Third Party Complaint Against the United States of America Internal Revenue Service of the Department of the Treasury. In its third-party complaint, J & M alleges that it "did nothing but comply with specific instructions in a contract with the United States, which was exercising a core government function." Id. ¶ 5, at 2. Accordingly, J & M contends that it "is entitled to the government contractor defense, which gives J & M the sovereign immunity of the federal government." Id.
The United States removed this case to federal court on April 14, 2006 pursuant to 28 U.S.C. §§ 1441, 1442, and 1446. See Notice of Removal ¶ 3, at 2, filed April 14, 2006 (Doc. 1)("Notice of Removal"). The United States represents that the IRS received J & M's Third-Party Complaint on or about March 13, 2006. See id. ¶ 1, at 1. The United States contends that the Court has original jurisdiction over this matter pursuant to 28 U.S.C. § 1331. See id. ¶ 3, at 2.
The United States then filed a motion to dismiss the Third-Party Complaint, arguing sovereign immunity barred J & M's action against it. See Motion to Dismiss Third-Party Complaint and Supporting Brief, filed June 13, 2006 (Doc. 7). J & M filed this Motion to Dismiss Bowers' claim on June 28, 2006. Subsequently, the United States requested to withdraw its motion to dismiss J & M's third-party complaint against it and represented to the Court that it had agreed to: (i) indemnify J & M pursuant to the terms of an Indemnification Agreement between the parties; (ii) represent J & M in this litigation; and (iii) cooperate with J & M in reaching an agreement on reasonable compensation for attorneys' fees should the United States be found liable for J & M's attorneys' fees. See Amended Motion to Withdraw the United States' Motion to Dismiss Third Party Complaint, filed July 26, 2006 (Doc. 20).
The Court granted the United States' request to withdraw its opposition to the third-party complaint on October 17, 2006. See Memorandum Opinion and Order, filed October 17, 2006 (Doc. 28). On October 19, 2006, the United States filed its brief in support of J & M's motion to dismiss Bowers' cause of action.
Pursuant to Local Rule 7.4(a), whenever any party appears pro se, a moving party "must request concurrence of each party, at least three (3) working days before filing a motion." D.N.M.L.R.-Civ. 7.4(a). On June 1, 2004, more than three weeks before filing this motion, J & M's counsel asked Bowers if he would consent to dismissing his lawsuit. J & M represents that Bowers responded: "[W]hy would I do that?" Motion to Dismiss at 3. J & M's counsel explained that, in his opinion, Bowers does not have a case, and reminded Bowers that J & M has counterclaimed for sanctions. See id. J & M's counsel states that Bowers indicated he would respond to J & M's counsel at a later time, but that he had not responded at the time J & M filed its Motion to Dismiss. See id.
J & M moves the Court to dismiss Bowers' claims with prejudice. See Motion to Dismiss at 8. J & M reserves its right to file a motion for attorneys' fees under rule 11 of the Federal Rules of Civil Procedure within thirty days of the entry of judgment. See D.N.M.L.R.-Civ. 54(a).
The Supreme Court of the United States and the United States Court of Appeals for the Tenth Circuit have recognized the derivative jurisdiction doctrine, but in 1986, Congress abolished the doctrine for removals under 28 U.S.C. § 1441. When a defendant files a third-party complaint against the United States for collection of revenue, 28 U.S.C. § 1442(a) allows removals of an entire case. Moreover, once a case is removed, and no one files a motion to remand, the only issue for the court is whether the court has subject-matter jurisdiction.
Before 1986, the Supreme Court of the United States had characterized federal courts' removal jurisdiction as "a purely derivative form of jurisdiction." Arizona v. Manypenny, 451 U.S. 232, 242, 101 S.Ct. 1657, 68 L.Ed.2d 58 (1981). The Supreme Court in Arizona v. Manypenny explained that, "[i]n the area of general civil removals, it is well settled that if the state court lacks jurisdiction over the subject matter or the parties, the federal court acquires none upon removal, even though the federal court would have had jurisdiction if the suit had originated there." Id. at 243, 101 S.Ct. 1657. The United States Court of Appeals for the Tenth Circuit had also recognized the derivative jurisdiction doctrine. See Goodrich v. Burlington N. R.R. Co., 701 F.2d 129, 130 (10th Cir.1983). In Goodrich v. Burlington Northern Railroad Company, the Tenth Circuit affirmed a district court's decision to remand a defendant's third-party complaint filed against the United States in state court. See id. at 130-31. The Tenth Circuit noted that, although the federal district court would have had jurisdiction over the third-party complaint had the defendant originally filed the action in federal court, the action could not be removed, because the state court did not have jurisdiction over the third-party complaint. See id.
The relevance of derivative jurisdiction may have been largely abolished in 1986,...
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