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In re 3660 La Hacienda Drive, San Bernardino

United States District Court, C.D. California

May 17, 2017

In re 3660 La Hacienda Drive, San Bernardino, California 92404

          Present: The Honorable Virginia A. Phillips, Chief United States District Judge

          CIVIL MINUTES - GENERAL

         Proceedings: Minute Order Denying Claimant Edgar C. Keller'S Motion to Remand (In Chambers)

         On April 18, 2017, Claimant Edgar C. Keller filed a Motion to Remand Proceeding to State Court and set the hearing on that motion for May 8, 2017. (Doc. No. 13.) On April 27, 2017, the United States of America filed its opposition. (Doc. No. 15.)

         This matter is appropriate for resolution without hearing pursuant to Local Rule 7-15 and will stand submitted on the papers timely filed. Having considered the papers filed in support of and in opposition to the Motion, the Court DENIES the Motion.

         I. Background

         On or about May 15, 2016, the Guild Administration Corporation, pursuant to its duties as property trustee, sold the residence located at 3660 La Hacienda Drive, San Bernardino, California. (Doc. No. 13 at 2.) Upon completion of the trustee sale, the Guild Administration acquired excess proceeds of approximately $150, 000. (Id.) In June 2016, the Guild Administration sent notice to potential lien holders of the excess proceeds and requested all interested persons and entities file a written claim if they wished to assert ownership (“June 2016 notice”). (Id.) The Internal Revenue Service (“IRS”), as well as several other interested parties, filed claims with the Guild Administration shortly thereafter. (Id.)

         On or about September 23, 2016, the Guild Administration deposited the excess funds with the Superior Court of California for the County of San Bernardino and sent written notice to all interested parties that they had to file their claims with the superior court within 30 days (“September 2016 notice”). (Id. at 3.) That notice was sent to the Tax Division of the U.S. Attorney's Ofce in San Francisco, California, as well as IRS ofces in Laguna Nigel and Oakland, California, and the Tax Division of the Department of Justice in Washington D.C. (collectively, “Four Government Addresses”). (Id. at 3.) Over the next several weeks, the superior court mailed a notice of hearing and several claimants mailed copies of their claims to the Four Government Addresses. (Id. at 3-4.) On November 16, 2016, the superior court ordered that approximately $41, 000 of the excess proceeds be paid to the California Franchise Tax Board. (Id. at 4.) On December 20, 2016, the superior court clerk released those funds to the Franchise Tax Board. (Doc. No. 16 at 3.)[1]

         On January 5, 2017, the United States Attorney's Ofce for the Central District of California received a copy of the September 2016 notice regarding unresolved claims from the sale of 3660 La Hacienda Drive. (Doc. Nos. 1 at 1-2, 1-1 at 2-8.) On January 11, 2017, the superior court conducted a hearing regarding the disbursement of the excess proceeds. Claimant Edgar C. Keller and Janet M. Keller appeared at the hearing and submitted a proposed order to the superior court that disbursed the remaining funds equally between themselves. (Id. at 4, 20.) On January 13, 2017, the Government removed this matter to federal court. (Doc. No. 1.)

         II. Discussion

         Claimant contends that the IRS waived its right to remove this action by failing to file a claim with the superior court or remove the action in a timely fashion. (Doc. No. 13 at 8.) Claimant points to California Civil Code § 2924j(d), which requires that claims be filed with the superior court within 30 days from the date of notice of excess funds.

         A. Timeliness

         As set forth in 28 U.S.C. § 1446(b), removal must be made within 30 days of receipt by the defendant of a copy of the initial pleading. The U.S. Supreme Court has explained that “a named defendant's time to remove is triggered by simultaneous service of the summons and complaint, or receipt of the complaint, ‘through service or otherwise, ' after and apart from service of the summons, but not by mere receipt of the complaint unattended by any formal service.” Murphy Bros. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 347-48 (1999) (emphasis added).

         “The procedural requirements for ‘actions in the State courts' that ‘involv[e] liens arising under the internal revenue laws' are set forth in 28 U.S.C. § 2410(b).” Quality Loan Service Corp. v. 24702 Pallas Way, 635 F.3d 1128, 1133 (9th Cir. 2011). Section 2410(b) provides that “service upon the United States shall be made by serving the process of the court with a copy of the complaint upon the United States attorney for the district in which the action is brought” (or upon his designee) and “by sending copies of the process and complaint, by registered mail, or by certified mail, to the Attorney General of the United States at Washington, District of Columbia.”

         Pursuant to § 2410(b), the removal clock in this matter did not start until the U.S. Attorney's Ofce for the Central District of California received a copy of the September 2016 notice on January 5, 2017. As the Government removed this ...


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