Morris v. United States

• Decision Date: 23 August 2013
• Docket Number: No. 12-4532,12-4532
• Parties: MARY MORRIS, Plaintiff-Appellant, v. UNITED STATES OF AMERICA, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

MARY MORRIS, Plaintiff-Appellant, v. UNITED STATES OF AMERICA, Defendant-Appellee.

No. 12-4532

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

FILED AUGUST 23, 2013

NOT RECOMMENDED FOR PUBLICATION

File Name: 13a0783n.06

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO

OPINION

Before: GILMAN, GRIFFIN, and STRANCH, Circuit Judges.

RONALD LEE GILMAN, Circuit Judge. Mary Morris sued the United States, alleging that the imposition of a federal tax lien on her property by the Internal Revenue Service (IRS) without a prior hearing violated her right to procedural due process under the Fifth Amendment to the United States Constitution. The district court ruled against her on the merits. As part of the government's response to Mrs. Morris's appeal, it argues for the first time that the suit is barred by the Tax Anti-Injunction Act, the Declaratory Judgment Act, and sovereign immunity. For the reasons set forth below, we agree with the government's belated argument.

I. BACKGROUND

In June 2011, Mrs. Morris received a letter from the IRS titled "Notice of Federal Tax Lien Filing Nominee or Alter-Ego," accompanied by a "Form 668(Y), Notice of Federal Tax Lien." The letter stated that Mrs. Morris had been "identified as the nominee or alter-ego for Daniel E. Morris,"her husband, and informed her that the IRS has "filed a Notice of Federal Tax Lien" on her property. It further explained that Mrs. Morris could appeal the filing of the notice and could request the lien's discharge by either paying the taxes due or posting a bond.

The Form 668(Y) Notice of Federal Tax Lien provided "notice that taxes (including interest and penalties) have been assessed against" Mrs. Morris as "nominee/transferee/fraudulent conveyee" of Mr. Morris. It explained that, because the taxes had remained unpaid despite a demand for payment, there had arisen "a lien in favor of the United States on all property and rights to property belonging to [Mrs. Morris] for the amount of these taxes, and additional penalties, interest, and costs that may accrue." The Notice identified the amount due as $226,600.64, arising from unpaid taxes for the years 1997, 1999, and 2000. Mrs. Morris was not given an opportunity to be heard prior to the imposition of the lien.

In December 2011, Mrs. Morris filed suit against the government in the United States District Court for the Northern District of Ohio. She alleged that the lien "has encumbered her property, has restricted her ability to use and/or transfer her property, has impaired [her] credit, and has impaired her ability to enjoy her retirement." The complaint further alleged that the imposition of the lien without a prior hearing amounted to a taking of property without due process of law, in violation of the Fifth Amendment. Mrs. Morris accordingly requested that the court declare a constitutional violation, void the lien ab initio, and award damages "not yet ascertainable" but estimated to be in excess of $100,000.

In its answer, the government did not contest any of the essential factual allegations of the complaint, but denied that Mrs. Morris was entitled to the relief requested. Mrs. Morris respondedby filing a motion for judgment on the pleadings. In opposing the motion, the government argued that due process is satisfied by the procedures available to a taxpayer for contesting the lien after its imposition and does not require a pre-imposition hearing.

The district court held that the availability of a quiet-title action to determine whether the nominee lien is valid constitutes a sufficient opportunity for a hearing under the Due Process Clause. It therefore denied Mrs. Morris's motion for judgment on the pleadings. After the court entered its order denying the motion, the parties jointly moved for the order to be deemed final and appealable. The court accordingly entered final judgment in favor of the government. This appeal followed.

II. ANALYSIS

On appeal, Mrs. Morris presses the same argument that she presented below, contending that due process requires a hearing prior to the imposition of a nominee tax lien. This argument is clearly foreclosed by nearly 100 years of precedent holding that the "pay first, sue later" principle embodied in the Internal Revenue Code is constitutional. See, e.g., Dodge v. Osborn, 240 U.S. 118, 122 (1916); Phillips v. Comm'r of Internal Revenue, 283 U.S. 589, 595 (1931); Bob Jones Univ. v. Simon, 416 U.S. 725, 746-48 (1974); G. M. Leasing Corp. v. United States, 429 U.S. 338, 352 n.18 (1977). So if the case were before us on the merits, it would have resulted in an easy affirmance.

But the government is not content with winning on the merits, and argues for the first time on appeal that the courts are without subject-matter jurisdiction to decide this case. The government contends that the Tax Anti-Injunction Act, 26 U.S.C. § 7421, deprives the courts of jurisdiction over the portions of the complaint requesting declaratory and injunctive relief, and that sovereign immunity bars Mrs. Morris's damages claim.

As an initial matter, we note that Mrs. Morris does not question the jurisdictional nature of the Tax Anti-Injunction Act or the sovereign-immunity doctrine; nor does she contend that the government has waived these arguments by failing to raise them below. The courts have long treated both matters as jurisdictional and therefore unwaivable, in accordance with Supreme Court precedent. See, e.g., United States v. Mitchell, 445 U.S. 535, 538 (1980) ("It is elementary that the United States, as sovereign, is immune from suit save as it consents to be sued, and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit.") (brackets, ellipsis, and internal quotation marks omitted); Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 5 (1962) ("The object of [the Tax Anti-Injunction Act] is to withdraw jurisdiction from the state and federal courts to entertain suits seeking injunctions prohibiting the collection of federal taxes.").

In recent years, however, there has been a growing debate about whether the term "jurisdiction" as used in Supreme Court jurisprudence invariably refers to the concept in its technical, authority-to-decide sense. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 90 (1998) (observing that "[j]urisdiction . . . is a word of many, too many, meanings") (internal quotation marks omitted). Compare RYO Mach., LLC v. U.S. Dep't of Treasury, 696 F.3d 467, 470-71 (6th Cir. 2012) (holding that the Tax Anti-Injunction Act "prevents courts from asserting jurisdiction over" preemptive tax challenges), with Hobby Lobby Stores, Inc. v. Sebelius, ____ F.3d ____, No. 12-6294, 2013 WL 3216103, *37 (10th Cir. June 27, 2013) (en banc) (Gorsuch, J.,concurring) ("In the end, the [Tax Anti-Injunction Act] shows none of the hallmarks of a jurisdictional restriction, and has many features that collectively indicate otherwise.").

We have no occasion in the present case to weigh in on this debate because Mrs. Morris does not contest the jurisdictional nature of the Tax Anti-Injunction Act or of sovereign immunity. Her argument, rather, is that the Tax Anti-Injunction Act does not bar her claim because she is not seeking injunctive relief, and that sovereign immunity is no barrier because the federal courts have jurisdiction over actions brought under 28 U.S.C. § 1331. We will accordingly continue to treat both the Tax Anti-Injunction Act and sovereign immunity as jurisdictional for the purpose of the present case and will reserve the question of whether they are truly so for a case in which the issue is squarely presented.

Such jurisdictional treatment does not affect the outcome of this case because, even if we were to hold that the Tax Anti-Injunction Act and sovereign immunity do not implicate the courts' subject-matter jurisdiction, we would still entertain the government's arguments. We would do so because the rule that arguments presented for the first time on appeal are waived is not absolute, but is rather a "general rule" that admits of "deviations" in "exceptional cases or particular circumstances." Pinney Dock & Transp. Co. v. Penn Cent. Corp., 838 F.2d 1445, 1461 (6th Cir. 1988) (internal quotation marks omitted). For example, this court has addressed an argument raised for the first time on appeal when it was of a "purely legal" nature and its resolution "require[d] no further development of the record at the district court level." United States v. Ellison, 462 F.3d 557, 560-61 (6th Cir. 2006).

The argument that the Tax Anti-Injunction Act and sovereign immunity bar Mrs. Morris's suit is just such a purely legal argument, and we would address it even if we did not consider it to be of a jurisdictional nature. Mrs. Morris's suit is in fact barred for the reasons discussed below, so whether that bar is characterized as jurisdictional makes no practical difference for the case's disposition.

With this prologue out of the way, we now proceed to decide whether Mrs. Morris's suit is barred by the Tax Anti-Injunction Act and sovereign immunity. The Tax Anti-Injunction Act provides that, except for certain lawsuits authorized elsewhere in the Internal Revenue Code, "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed." 26 U.S.C. § 7421(a).

In Enochs v. Williams Packing & Navigation Co., 370 U.S. 1 (1962), the Supreme Court held that "[t]he object of § 7421(a) is to withdraw jurisdiction from the state and federal courts to entertain suits seeking injunctions prohibiting the collection of federal taxes," and it rejected the argument that suits for an injunction should be permitted where the legal remedy is inadequate. 370 U.S. at 5-6. The Court explained that this policy is justified by the government's need to promptly collect...