Wagner v. U.S., 07-11119.
| Decision Date | 10 October 2008 |
| Docket Number | No. 07-11119.,07-11119. |
| Citation | 545 F.3d 298 |
| Parties | Qui P. WAGNER, Plaintiff-Appellant, v. UNITED STATES of America; Department of Treasury; Internal Revenue Service, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Appeal from the United States District Court for the Northern District of Texas.
Before DAVIS, CLEMENT and ELROD, Circuit Judges.
Plaintiff-Appellant Qui Wagner appeals the district court's grant of summary judgment in favor of the Defendant-Appellee, the United States of America, on her sole claim for a return of funds allegedly wrongfully levied by the government. Because the district court lacked subject matter jurisdiction to hear the suit, we vacate the district court's judgment and dismiss the suit for lack of subject matter jurisdiction.
The relevant facts are not in dispute. Qui Wagner was married to Frederick Wagner until June 20, 2003, when a Final Decree of Divorce was entered in Tarrant County, Texas. As part of the Final Decree, Ms. Wagner was awarded all net proceeds from the sale of the marital residence in Colleyville, Texas. Ms. Wagner did not separately record the divorce decree in the deed records of Tarrant County.
On June 2, 2004, the Internal Revenue Service (1) assessed taxes against Mr. Wagner individually pursuant to I.R.C. § 6672 and (2) filed a notice of tax lien against Mr. Wagner in Tarrant County, Texas. In either February or March of 2006, Ms. Wagner attempted to sell the house, but the IRS refused to release the tax lien and issue a certificate of discharge unless and until Ms. Wagner agreed to pay the IRS Mr. Wagner's community interest in the home equity from the sale of the property. On March 6, 2006, Ms. Wagner paid the IRS $35,409.63 from the sale proceeds. On the same day, the IRS acknowledged, by letter, receipt of the $35,409.63 check and informed Ms. Wagner that the certificate of discharge would not be distributed until she paid the full amount of Mr. Wagner's interest, including the additional amount of $3,515.00. By letter dated April 4, 2006, the IRS informed her that, because it had not received the amount of $3,515.00 as set out in the March 6 letter, "the application for a Certificate of Discharge is being closed without the issuance of the certificate." In September of 2006, Ms. Wagner sought a refund from the IRS, but the IRS denied the request in October.
On November 8, 2006, Ms. Wagner filed the instant suit against the United States in the district court, alleging subject matter jurisdiction under 28 U.S.C. § 1346(a) and asserting three claims: wrongful levy, pursuant to I.R.C. § 7426, in the amount of $35,409.63; pre-judgment interest on that amount, pursuant to I.R.C. § 7426(g); and attorney's fees and costs, pursuant to I.R.C. § 7430.
In July 2007, the government filed the motion for summary judgment at issue in Ms. Wagner's appeal, arguing that Ms. Wagner had failed to state a claim upon which relief may be granted, based upon this Court's opinions in Prewitt v. United States, 792 F.2d 1353 (5th Cir.1986), and United States v. Creamer Industries, Inc., 349 F.2d 625 (5th Cir.1965). In opposition, Ms. Wagner argued that other circuits have rejected Prewitt and Creamer based on United States v. National Bank of Commerce, 472 U.S. 713, 105 S.Ct. 2919, 86 L.Ed.2d 565 (1985), which was decided before Prewitt but was not cited therein. The district court held a telephone conference with the parties on August 27, 2007 during which the court agreed with the government and held, consistent with Prewitt, that the tax lien had priority over the unrecorded divorce decree. Accordingly, the district court granted the government's motion for summary judgment in a final judgment dated August 27, 2007.
Ms. Wagner appeals that judgment, arguing only that we should overturn Prewitt. The government argues that the district court's opinion was substantively correct but argues, for the first time on appeal, that the district court lacked subject matter jurisdiction over the dispute. We requested additional briefing from the parties on the issue of subject matter jurisdiction. Both parties having submitted their briefs on that point, we now find that the district court indeed lacked subject matter jurisdiction to hear Ms. Wagner's sole claim.
"We review questions of subject matter jurisdiction de novo." In re Bissonnet Investments LLC, 320 F.3d 520, 522 (5th Cir.2003) (citing Lundeen v. Mineta, 291 F.3d 300, 303 (5th Cir.2002)).
In its original brief in opposition, the government asserted that the district court was otherwise substantively correct but lacked subject matter jurisdiction to render judgment, for the following reasons: (a) the IRS had not levied upon the property in question, so the district court lacked jurisdiction for a wrongful levy action under I.R.C. § 7426; (b) the IRS never issued Ms. Wagner a certificate of discharge of the property subject to the lien, so the district court lacked jurisdiction to hear a substitution-of-value refund clam under I.R.C. § 7426(a)(4); and (c) Ms. Wagner did not pay the outstanding tax liability in full, so the district court lacked jurisdiction to hear a refund claim, assuming one could be viable, under 28 U.S.C. § 1346(a)(1).
In addition to the complaint's assertions noted above, Ms. Wagner now specifically argues, in her brief on jurisdiction, that the district court had subject matter jurisdiction under I.R.C. § 7426(a)(4). Taking into account the complaint's alleged wrongful levy cause of action; Ms. Wagner's current argument that jurisdiction exists under I.R.C. § 7426(a)(4); and the complaint's stated basis for jurisdiction under 28 U.S.C. § 1346(a), each of the government's arguments must be addressed by this court. If the district court had subject matter jurisdiction under any one of those three bases—or any other basis—to hear her suit, then we may address the merits of her appeal. Otherwise, we must dismiss the suit for lack of subject matter jurisdiction.
As an initial matter, the government argues that the complaint's assertion of jurisdiction under 28 U.S.C. § 1346(a) is improper if the complaint asserts a true wrongful levy claim because § 1346(a) relates only to tax-refund suits. Instead, jurisdiction for the wrongful levy claim must be found, if at all, under § 1346(e).1 While that is apparently true, we will examine generally whether the district court had subject matter jurisdiction to hear the case, whatever the precise statutory basis.
The government properly reiterates that suits against the government are controlled by general principles of sovereign immunity, citing, inter alia, United States Department of Energy v. Ohio, 503 U.S. 607, 112 S.Ct. 1627, 118 L.Ed.2d 255 (1992).
We start with a common rule, with which we presume congressional familiarity, that any waiver of the National Government's sovereign immunity must be unequivocal. Waivers of immunity must be construed strictly in favor of the sovereign, and not enlarged beyond what the language requires.
Id. at 615, 112 S.Ct. 1627 (). Section 1346(a)(1) and (e) constitute waivers of sovereign immunity. See United States v. Williams, 514 U.S. 527, 531, 115 S.Ct. 1611, 131 L.Ed.2d 608 (1995) (discussing § 1346(a)(1)); United States v. Wingfield, 822 F.2d 1466, 1471 (10th Cir.1987) ().
The permitted causes of action against the United States by a taxpayer (here, Mr. Wagner) or a third party (here, Ms. Wagner) are found in I.R.C. § 7421, et seq. Specifically, for suits by third parties ("persons other than taxpayers"), the relevant statute is I.R.C. § 7426, which "constitutes a waiver by the United States of its sovereign immunity to suit." Baddour, Inc. v. United States, 802 F.2d 801, 804 (5th Cir.1986). Section 7426(a) provides four causes of action, two of which are potentially relevant to this case:
(a) Actions permitted.—
(1) Wrongful levy.—If a levy has been made on property or property has been sold pursuant to a levy, any person (other than the person against whom is assessed the tax out of which such levy arose) who claims an interest in or lien on such property and that such property was wrongfully levied upon may bring a civil action against the United States in a district court of the United States. Such action may be brought without regard to whether such property has been surrendered to or sold by the Secretary. ...
(4) Substitution of value.—If a certificate of discharge is issued to any person under section 6325(b)(4) with respect to any property, such person may, within 120 days after the day on which such certificate is issued, bring a civil action against the United States in a district court of the United States for a determination of whether the value of the interest of the United States (if any) in such property is less than the value determined by the Secretary. No other action may be brought by such person for such a determination.
III.A.
The government first argues that the district court lacked subject matter jurisdiction to hear Ms. Wagner's stated wrongful levy claim because she failed to satisfy the requirements to bring such a claim under § 7426(a)(1). "In order to state a cause of action under this provision the plaintiff must show: (1) that a levy has been filed against property in plaintiff's hands, (2) that plaintiff has an interest in or a lien on the property which is senior to the interest of the United States, and (3) that the levy was wrongful." Texas Commerce Bank-Fort Worth, N.A. v. United States, 896 F.2d 152, 156 (5th Cir.1990). Naturally, "[i]f the...
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