Gold Forever Music, Inc. v. United States of America

Filing 12

OPINION AND ORDER granting 8 defendant's Motion to Dismiss. Signed by District Judge George Caram Steeh. (MBea)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
GOLD FOREVER MUSIC, INC.,
Plaintiff,
Case No. 17-13927
HON. GEORGE CARAM STEEH

vs.
UNITED STATES OF AMERICA,
Defendant.
__________________________/

OPINION AND ORDER GRANTING
DEFENDANT’S MOTION TO DISMISS (DOC. 8)
Plaintiff Gold Forever Music, Inc. filed a wrongful levy action against
defendant the United States of America on December 6, 2017. This matter
is presently before the Court on defendant’s motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). Pursuant to Local
Rule 7.1(f)(2), the Court shall rule without oral argument. For the reasons
stated below, defendant’s motion is GRANTED.
I. Background
Plaintiff is a music publishing company owned by Edward Holland, Jr.
Holland owes the Government over $19 million in unpaid federal income
tax liabilities. (Doc. 8-1 at PageID 58). The Internal Revenue Service (IRS)
levied plaintiff’s royalty payments and applied the funds to Holland’s debt.

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See (Doc. 1 at PageID 2). Plaintiff alleges that the royalty payments were
not owed to Holland, but rather, plaintiff’s property. (Doc. 1 at PageID 1).
The IRS served two notices of levy. (Doc. 8-2 at PageID 60, Doc 8-3
at PageID 61). The first was served upon Broadcast Music, Inc. (BMI) on
August 27, 2012. (Doc. 8-2 at PageID 60). The second was served upon
Universal Music Publishing (Universal) on the same date. (Doc. 8-3 at
PageID 61). Plaintiff’s complaint acknowledges that these notices were
served in 2012. (Doc. 1 at PageID 2). Funds were paid in 2016 and 2017.
(Doc. 1 at PageID 3). Plaintiff alleges that it requested refunds on June 23,
2017 and September 17, 2017. (Doc. 1 at PageID 4).
II. Legal Standard
Defendant moves to dismiss on the grounds that plaintiff’s action is
time barred under the statute of limitations codified at 26 U.S.C. § 6532(c).
Although, in general, statutes of limitations serve as
affirmative defenses, in suits against the United
States, compliance with the applicable statute
serves also as a jurisdictional prerequisite. See
Douglas v. United States, 562 F.Supp. 593
(S.D.Ga.1983). The consent by the United States to
be sued is conditioned upon the action commencing
within the statutory time period. See Dieckmann v.
United States, 550 F.2d 622 (10th Cir.1977). These
statutory waivers of sovereign immunity are
construed strictly, and if the time limit has elapsed,
the action may properly be dismissed for lack of
subject matter jurisdiction. Id. at 623.
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Miller v. United States, 838 F. Supp. 338, 339 (N.D. Ohio 1993). See also
Ohio Nat. Life Ins. Co. v. United States, 922 F.2d 320, 324 (6th Cir. 1990)
(stating that the statutory period of limitations codified at 26 U.S.C. § 6532
is “jurisdictional”).
III. Analysis
Plaintiff filed a cause of action under 26 U.S.C. § 7426. Subsection (i)
of this statute states that 26 U.S.C. § 6532(c) governs a period of limitation
for actions brought under § 7426. Title 26 U.S.C. § 6532(c) governs “suits
by persons other than taxpayers.” It currently provides:
(1) General rule – Except as provided by paragraph
(2), no suit or proceeding under section 7426 shall
be begun after the expiration of 2 years from the
date of the levy or agreement giving rise to such
action.
(2) Period when claim is filed – If a request is made
for the return of property described in section
6343(b), the 2-year period prescribed in paragraph
(1) shall be extended for a period of 12 months from
the date of filing of such request or for a period of 6
months from the date of mailing by registered or
certified mail by the Secretary to the person making
such request of a notice of disallowance of the part
of the request to which the action relates, whichever
is shorter.
26 U.S.C. § 6532(c).
The December 2017 tax law amended 26 U.S.C. § 6532(c) by
extending the limitations period from nine months to two years. Pub. L. No.
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115-97, § 1107(b), 131 Stat. 2054, 2091 (enacted Dec. 22, 2017).
Defendant asserts that the new law did not make the amended limitations
period retroactive. See id. § 11071(c) (stating the amendments shall apply
to “levies made after the date of the enactment of this Act” and “levies
made on or before such date if the 9-month period has not expired under
section 6343(b) of the Internal Revenue Code of 1986”). The Court agrees
that the levies in question are subject to the prior 9-month limitation period.
The parties dispute when the statutory period in § 6532(c)(1) begins.
Defendant asserts that the phrase “the date of the levy” refers to “the date
on which the underlying notice of levy is served.” (Doc. 8 at PageID 53)
(citing 26 C. F. R. § 301.6331-1(c)). Plaintiff argues that “the date of the
levy” may also refer to the date of a seizure; namely the funds paid in 2016
and 2017. The Sixth Circuit has not recognized plaintiff’s argument. It has,
however, stated that service of a notice of levy “commenced the running of
the statute of limitations set forth in section 6532(c).” State Bank of Fraser
v. United States, 861 F.2d 954, 967 (6th Cir. 1988). See also Carter v.
United States, 110 F. App'x 591, 594 (6th Cir. 2004) (“The general rule is
that a wrongful levy suit must be filed within nine months of the receipt of
the notice of levy.”). This Court shall therefore consider the statutory period
to have begun when plaintiff was served with the notice of levy in 2012.
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Plaintiff’s complaint was filed in 2017, at least four years after service. As
such, plaintiff’s case is time-barred under § 6532(c)(1). Moreover, plaintiff’s
case is barred even if the amended 2 year limitation period applies
retroactively.
Plaintiff’s suit is also barred under § 6532(c)(2). Plaintiff requested
the return of its property in 2017. But “a request for return of property filed
under section 6532(c)(2) after the nine month period in section 6532(c)(1)
has expired is not effective so as to extend the period for suit.” De Gregory
v. United States, 395 F. Supp. 171, 174 (E.D. Mich. 1975). See also Carter,
110 F. App’x at 594 (“If a claimant files a request for the return of property
within that nine-month period, then . . . the nine-month period for filing a
civil action in federal court is extended for the shorter of either an additional
twelve months from the date of filing a § 6343 administrative request or an
additional six months from the date of mailing of the notice disallowing that
request.”). As such, “[t]he statute of limitations period is [ ] never more than
twenty-one months (nine months plus twelve months), although it may be
less.” Carter, 110 F. App’x at 594. Plaintiff’s suit was filed more than twenty
one months after the notice of levy was served. Further, it was filed more
than three years (two years plus twelve months) after the notice of levy was

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served. As such, plaintiff’s suit is time-barred even if the amended limitation
period applies.
IV. Conclusion
For the reasons stated above, defendants’ motion is GRANTED.
IT IS SO ORDERED.
Dated: July 11, 2018
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE

Certificate of Service
Copies of this Order were served upon attorneys of record on
July 11, 2018, by electronic and/or ordinary mail.
s/Marcia Beauchemin
Deputy Clerk

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