Lewis v. Hunt

• Decision Date: 12 July 2007
• Docket Number: No. 05-30928.,05-30928.
• Citation: 492 F.3d 565
• Parties: Richard N. LEWIS, etc., et al., Plaintiffs, v. Caroline Lewis HUNT, et al., Defendants, Ellen Hunt Flowers, Mary Hunt Huddleston, Houston Bunker Hunt, Elizabeth Hunt Curnes, Defendants-Appellees, v. United States of America, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

492 F.3d 565

Richard N. LEWIS, etc., et al., Plaintiffs, v. Caroline Lewis HUNT, et al., Defendants, Ellen Hunt Flowers, Mary Hunt Huddleston, Houston Bunker Hunt, Elizabeth Hunt Curnes, Defendants-Appellees, v. United States of America, Defendant-Appellant.

No. 05-30928.

United States Court of Appeals, Fifth Circuit.

July 12, 2007.

Joan I. Oppenheimer (argued), Jonathan S. Cohen, U.S. Dept. of Justice, Tax Div. App. Section, Washington, DC, for U.S.

Glenn L. Langley, Hargrove, Smelley & Strickland, William Chase Kalmbach, Cook, Yancey, King & Galloway, Shreveport, LA, for Flowers, Hunt and Curnes.

F. Drake Lee, Jr. (argued), Cook, Yancey, King & Galloway, Shreveport, LA, for Huddleston and Hunt.

Daniel Scott Brown, D. Scott Brown Law Office, Mansfield, LA, for Huddleston.

Appeal from the United States District Court for the Western District of Louisiana.

Before KING, STEWART and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

Richard N. Lewis and William J. Lewis, as trustees of the Turner Hunt Lewis Trust, and as co-administrators of the Succession of Turner Hunt Lewis, brought this suit in a Louisiana state court seeking instructions as to the validity under Louisiana law of a certain provision of the trust instrument, or, alternatively, for a concursus proceeding. They named the United States as a party, asserting that its sovereign immunity had been waived by 28 U.S.C. § 2410 for this suit which involves civil actions to quiet title to, or interpleader with respect to, property of the trust on which the government may have or claim a tax lien. The government removed the case to federal district court, and that court rendered summary judgment on the merits declaring that the trust provision was valid under Louisiana law and that the Government had no right or claim to any trust assets. See In re Turner Hunt Lewis Trust, 388 F.Supp.2d 747 (W.D.La. 2005). The government appealed.

After hearing oral arguments, we requested additional briefs from the parties on questions pertaining to sovereign immunity and subject matter jurisdiction. Having considered the arguments of the parties and the record in this case, we conclude that, because the allegations of the complaint do not establish that the government had or claimed a lien or a mortgage on the property of the trust when the suit was filed, the complainants may not hale the United States into court under 28 U.S.C. § 2410. Accordingly, we must dismiss this appeal and remand the case to the district court with instructions to dismiss the suit against the United States and to remand the case to the state court for further proceedings consistent with this opinion. Although the parties and the district court did not raise these jurisdictional issues, "federal trial and appellate courts have the duty to examine the basis for their subject matter jurisdiction, doing so on their own motion if necessary." Torres v. Southern Peru Copper Corp., 113 F.3d 540, 542 (5th Cir.1997); Perez v. Region 20 Educ. Serv. Ctr., 307 F.3d 318, 333 n. 8 (5th Cir.2002) (holding that sovereign immunity issues may be raised sua sponte as they bear on subject matter jurisdiction).

I. Background

Turner Hunt Lewis, a resident of Lincoln Parish, Louisiana, died October 13, 2002 without issue and without ever having been married. He left no will and, under the Louisiana laws of intestate succession, his only heirs were his nieces and nephews. One of his nieces, Caroline Lewis Hunt, would have inherited one-third of his estate as an intestate heir. Prior to his death, however, Mr. Lewis was interdicted,¹ and his estate, which exceeded $16.5 million, was placed in the Turner Hunt Lewis Trust. The trust instrument provided that, upon his death without a valid will, each of his heirs under state law, except for Caroline Lewis Hunt, would be his successor principal beneficiaries; and that any property that would have devolved to his niece and intestate heir, Caroline Lewis Hunt, would vest in her descendants as if she had predeceased Turner Hunt Lewis.

As the trustees' undisputed pleadings establish, many years before Mr. Lewis's interdiction, Caroline Lewis Hunt and her husband entered a Collateral Agreement with the Internal Revenue Service to turn over any inheritances that they received in order to discharge their federal income tax liability. It is also conceded that the only reason that Mr. Lewis was interdicted and his property placed in trust was to prevent a one-third share of Mr. Lewis's assets from going to Caroline through intestate succession, and subsequently to the federal government to pay off the back taxes owed by Caroline and her husband.

The underlying issue, which is res nova under Louisiana law, may be restated more fully as follows: whether the curator of a fully interdicted person without a will can, with court approval, supersede the law of intestate succession by acting for the interdict to create a trust, place the interdict's property in the trust, and name persons as successor beneficiaries different from those who otherwise would have been entitled to succeed as intestate heirs. The Louisiana statutes do not provide a clear and unambiguous answer to this question.²

On October 16, 2003, the plaintiffs, the trustees-administrators, filed this suit in state court pursuant to Louisiana Revised Statutes § 9:2233 and 28 U.S.C. § 2410 for trustees' instructions or, alternatively, for concursus proceedings, to address the question of whether the trust instrument's successor beneficiary provisions were valid under Louisiana law. The trustee's complaint also named the United States as a party to this suit, claiming the authority to hale it into the state court under 28 U.S.C. § 2410 on the grounds that the United States may have or claim a lien against the trust property through Caroline Hunt.

Specifically, in respect to waiver of sovereign immunity, the allegations of the complaint, in pertinent part, state:

4.

Jurisdiction over the United States of America with respect to the Trust is conferred on this Court by 28 U.S.C. § 2410, in that, as shown below, the United States of America may have a lien interest in certain of the Trust assets, and 28 U.S.C. § 2410 provides that the United States of America may be named a party in any civil action in any state court having jurisdiction of the subject matter to quiet title to real or personal property on which the United States of America may have a[sic] claim a lien.

....

15.

On September 23, 1988, the New Orleans District of the Internal Revenue Service filed in the records of Lincoln Parish, Louisiana, in Mortgage Book 334 at Page 145 a Notice of Federal Tax Lien Under Internal Revenue Laws (hereinafter the Notice) regarding Caroline L. Hunt, residing at 4508 Lakeside Drive, Dallas, Texas 75205. Pursuant to its terms, the Notice operates as a certificate of release of the federal tax lien as of October 22, 1994. Subsequent to the filing of the Notice but before October 22, 1994, Caroline Lewis Hunt entered into that certain Collateral Agreement between herself, her spouse, and the Internal Revenue Service dated December 15, 1988 (the Collateral Agreement), which obliges her to turn over to the Internal Revenue Service one hundred percent (100%) of the amount of any devise, bequest, or inheritance she receives.

....

17.

In the event the Trust instrument does not comply with Louisiana Code of Civil Procedure Articles 4566(D) and 4269.1, regarding the placing of the property of an interdict into trust, defendant, Caroline Lewis Hunt, as Mr. Lewis' heir, is entitled to an undivided one-third (1/3) interest in the assets standing in the Trust, and, defendant, the United States of America, may, as a result of the Collateral Agreement, have or claim a lien on a portion of the assets standing in the Trust.

(emphasis added).

II. Waiver of Sovereign Immunity Under 28 U.S.C. § 2410

In order to hale the federal government into a court proceeding, a plaintiff must show that there has been a valid waiver of sovereign immunity. "A waiver of the Federal Government's sovereign immunity must be unequivocally expressed in statutory text . . . and will not be implied." Lane v. Pena, 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996) (citing United States v. Nordic Village, Inc., 503 U.S. 30, 33-34, 112 S.Ct. 1011, 117 L.Ed.2d 181 (1992)). The mere agreement in court between parties and their counsel is not sufficient to constitute a waiver of sovereign immunity. Shaw, 309 U.S. at 501, 60 S.Ct. 659 ("No officer by his action can confer jurisdiction."). "Moreover, a waiver of the Government's sovereign immunity will be strictly construed, in terms of its scope, in favor of the sovereign." Lane, 518 U.S. at 192, 116 S.Ct. 2092. We may not enlarge the waiver beyond the purview of the statutory language. United States v. Williams, 514 U.S. 527, 531, 115 S.Ct. 1611, 131 L.Ed.2d 608 (1995). Absent a waiver of sovereign immunity, the federal government is immune from suit. Loeffler v. Frank, 486 U.S. 549, 554, 108 S.Ct. 1965, 100 L.Ed.2d 549 (1988). The absence of such a waiver is a jurisdictional defect. Kulawy v. U.S., 917 F.2d 729, 733 (2d Cir.1990); Bodin v. Vagshenian, 462 F.3d 481, 484 (5th Cir.2006) (holding that a lack of a waiver of sovereign immunity "deprives federal courts of subject matter jurisdiction").

Under 28 U.S.C. § 2410, Congress has waived the government's sovereign immunity to a limited class of civil actions, solely with respect to property on which the United States has or claims a mortgage or other lien. In pertinent part, Section 2410 provides: "[T]he United States may be named a party in any civil action or suit in any district court, or in any State court having jurisdiction of the subject matter . . . to quiet title to . . . [or] of interpleader or in the nature of interpleader with respect to... property on which the United States has or claims a mortgage or other lien." 28 U.S.C. § 2410(a).

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