United States District Court, S.D. California
Decided: February 17, 2014.
For Monique Candor, Plaintiff: Monique B. Candor, LEAD ATTORNEY, Monique Candor, Esq., San Diego, CA.
For United States of America, Defendant: U S Attorney CV, LEAD ATTORNEY, U S Attorneys Office Southern District of California, Civil Division, San Diego, CA; Lauren M. Castaldi, LEAD ATTORNEY, United States Department of Justice, Civil Tax Division, Washington, DC.
ORDER GRANTING GOVERNMENT'S MOTION TO DISMISS
HONORABLE LARRY ALAN BURNS, United States District Judge.
Monique Candor, a lawyer, was owed a lot of money by a client, and she expected to be paid when the client sold her home. Instead, the client settled a tax debt with the IRS. Candor sued, claiming that her lien on the home was superior to the IRS's liens, and that she was due some of the
sale proceeds. Now before the Court is the Government's motion to dismiss because it is immune.
I. Legal Standard
" 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." United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941). Thus, the Government's motion challenges the Court's jurisdiction, and is brought under Fed.R.Civ.P. 12(b)(1). See Balser v. Dep't of Justice, 327 F.3d 903, 908 (9th Cir. 2003); Gilbert v. Da Grossa, 756 F.2d 1455, 1458 (9th Cir. 1985). This case can go forward only if the Government has waived immunity, and the burden falls on Candor to demonstrate an " unequivocal waiver." United States v. Park Place Assocs., 563 F.3d 907, 924 (9th Cir. 2009).
In considering a motion to dismiss under Rule 12(b)(1), the Court isn't limited to the four corners of the complaint as it is with a 12(b)(6) motion. Americopters, LLC v. Fed. Aviation Admin., 441 F.3d 726, 732 n.4 (9th Cir. 2006). Rather, it can consider affidavits, declarations, and other evidence relevant to the its jurisdiction. Rivas v. Napolitano, 714 F.3d 1108, 1114 n.1 (9th Cir. 2013). It can also permit discovery to determine whether it has jurisdiction. Laub v. United States Dep't of Interior, 342 F.3d 1080, 1093 (9th Cir. 2003). But, the Government should only prevail here if the material jurisdictional facts aren't in dispute. Casumpang v. Int'l Longshoremen's & Warehousemen's Union, 269 F.3d 1042, 1060-61 (9th Cir. 2001).
Candor invokes two provisions of the Internal Revenue Code that waive sovereign immunity and allow for taxpayers to sue the United States. The first is 26 U.S.C. § 7426(a)(1), the " wrongful levy" provision, which " provides a remedy for a person whose property is levied upon by the IRS for the purpose of satisfying another person's tax liability." Compagnoni v. United States, 173 F.3d 1369, 1370 n.3 (11th Cir. 1999). The second is 26 U.S.C. § 7426(a)(3). Under this provision, a taxpayer with an interest in property sold to satisfy a tax lien can sue for a share of the proceeds held under a " substituted sale proceeds" agreement.
A. § 7426(a)(1)
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. 26 U.S.C. § 7426(a)(1).
To bring a wrongful levy suit against the United States, there must first be a levy. Denham v. United States, 811 F.Supp. 497, 500 (C.D. Cal. 1992); see also Wagner v. United States, 545 F.3d 298, 301-02 (5th Cir. 2008). " If the Government has not levied on property . . . the owner cannot challenge such a levy under 26 U.S.C. § 7426." United States v. Williams, 514 U.S. 527, 536, 115 S.Ct. 1611, 131 L.Ed.2d 608 (1995). The Government argues that there was never a levy on Candor's client's home, and that Candor's wrongful levy claim, for that reason, doesn't even get off of the ground. The Court agrees.
Candor's complaint doesn't specifically allege that the IRS levied on her client's home. ...