Thor Construction,Inc. v. Internal Revenue Service et al

Filing 20

ORDER Granting 14 Motion to Dismiss for Lack of subject matter jurisdiction and for failure to state a claim. Signed by Judge James C. Mahan on 4/6/2012. (Copies have been distributed pursuant to the NEF - SLR)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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THOR CONSTRUCTION, INC.,

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2:11-CV-1210 JCM (CWH)

Plaintiff,
v.

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U.S. DEPARTMENT OF TREASURYINTERNAL REVENUE SERVICE, et al.,

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Defendants.

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ORDER

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Presently before the court is defendant United States of America’s motion to dismiss for lack

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of subject matter jurisdiction and for failure to state a claim. (Doc. #14). Plaintiff Thor

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Construction, Inc. filed an opposition. (Doc. #18). Defendant then filed a reply. (Doc. #19).

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On September 30, 2010, the Internal Revenue Service (“IRS”) served a notice of levy on

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plaintiff for the unpaid taxes of Maximum Enterprises, Inc. (Doc. #1). The IRS issued a final

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demand for payment to plaintiff on November 10, 2010. (Doc. #1, Ex. 1). On January 12, 2011, the

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IRS issued a second final demand for payment. (Doc. #14, Ex. 1). The second final demand for

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payment erroneously referenced a January 12, 2011, notice of levy; the IRS did not issue a notice of

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levy on January 12, 2011. (Doc. #14, Ex. 1). Plaintiff did not surrender the property pursuant to the

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September 30, 2010, levy, and filed the instant complaint on July 26, 2011. (Doc. #1).

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The complaint maintains two separate actions: one for wrongful levy pursuant to 26 U.S.C.

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§ 7426 and one for federal interpleader pursuant to Federal Rule of Civil Procedure 22. (Doc. #1).

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James C. Mahan
U.S. District Judge

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Defendant now moves to dismiss the complaint for lack of subject matter jurisdiction and for failure

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to state a claim. First, defendant argues that the § 7426 cause of action should be dismissed because

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it is time-barred pursuant to 26 U.S.C. § 6532(c)(1). (Doc. #14). Second, defendant asserts that the

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Rule 22 interpleader action should be dismissed for lack of subject matter jurisdiction. (Doc. #14).

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Legal Standard

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A complaint must include a “short and plain statement of the claim showing that the pleader

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is entitled to relief.” FED. R. CIV. P. 8(a)(2). The statement of the claim is intended to “give the

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defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atlantic Corp.

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v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). Pursuant to Federal Rule of Civil

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Procedure 12(b)(6), courts may dismiss causes of action that “fail[] to state a claim upon which relief

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can be granted.”

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The court must “accept all factual allegations in the complaint as true.” Tellabs, Inc. v.

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Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Further, the court must draw all reasonable

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inferences in plaintiff’s favor. Twombly, 550 U.S. at 547. However, “[t]o survive a motion to

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dismiss, a complaint must contain sufficient factual matter . . . to state a claim to relief that is

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plausible on its face.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (internal citations omitted).

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Although “not akin to a ‘probability requirement,’” the plausibility standard asks for more than a

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sheer possibility that a defendant has acted unlawfully. Id. “Where a complaint pleads facts that are

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‘merely consistent’ with a defendant’s liability, it ‘stops short of the line between possibility and

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plausibility of entitlement to relief.’” Id.

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Wrongful Levy, 26 U.S.C. § 7426

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An action for wrongful levy by persons other than the taxpayer under 26 U.S.C. § 7426 must

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be filed within “9 months from the date of the levy or agreement giving rise to such action.” 26

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U.S.C. § 6532(c)(1). The court may dismiss the cause of action if, “the running of the statute is

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apparent on the face of the complaint.” Huynh v. Chase Manhattan Bank, 465 F.3d 992, 997 (9th

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Cir. 2006).

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James C. Mahan
U.S. District Judge

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In this case, the only notice of levy was filed on September 30, 2010. (Doc. #1). Therefore,

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plaintiff had until July 1, 2011, to file a wrongful levy action. 26 U.S.C. § 6532(c)(1). Plaintiff did

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not file the instant complaint until July 26, 2011. (Doc. #1). Accordingly, the running of the statute

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is apparent on the face of the complaint. See Huynh, 465 F.3d at 997.

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Plaintiff argues that the instant complaint is timely because the January 12, 2011, second

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demand for final payment “referred” to a second levy. (Doc. #18). Plaintiff does not assert, let alone

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demonstrate, that a second levy was issued. Instead, plaintiff argues that the second demand for final

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payment’s erroneous reference to a January 12, 2011, levy implied the existence of a second levy.

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Therefore, this “second levy” extended the deadline for filing a wrongful levy action to October 13,

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2011, because the IRS did not notify plaintiff of its mistake until after the statute of limitations had

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expired. (Doc. #18).

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Plaintiff is responsible for timely prosecuting its case. It is not reasonable for plaintiff to

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assume the existence of a second notice of levy simply because the second demand for final payment

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referenced a levy date different from the September 30, 2011, notice of levy. Accordingly, this

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action is not timely because plaintiff failed to file the instant action by July 1, 2011.

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Further, plaintiff did not extend the filing deadline by 12 months pursuant to 26 U.S.C. §

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6532(c)(2) by filing a request for relief from the levy. The 12-month extension pursuant to §

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6532(c)(2) only applies if the plaintiff makes a request “for the return of property.” 26 U.S.C. §

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6532(c)(2). Here, plaintiff never surrendered property, so it could not make a request “for the return

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of property” under § 6532(c)(2).

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Finally, plaintiff argues that equitable tolling applies and the instant action should not be

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dismissed as untimely. (Doc. #18). Specifically, plaintiff asserts that it relied on the “written

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representation that a second levy was issued on January 12, 2011 . . . .” (Doc. #18). Additionally,

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plaintiff alleges that it was “lulled into believing that [defendant] was working in good faith to

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resolve the wrongful levy” because defendant did not respond to plaintiff’s request for relief from

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the levy until after the limitations period had expired. (Doc. #18).

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James C. Mahan
U.S. District Judge

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The court finds that equitable tolling does not apply here. Again, plaintiff is responsible for

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prosecuting its case. It was unreasonable for plaintiff to rely on the alleged “written representation”

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in the second demand for final payment. Similarly, it was unreasonable for plaintiff to delay filing

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its wrongful levy action while waiting for an email response from defendant. Therefore, plaintiff’s

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wrongful levy action was not filed with the statute of limitations and must be dismissed.

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Interpleader Action, Federal Rule of Civil Procedure 22

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Federal Rule of Civil Procedure 22 “is merely a procedural device; it confers no jurisdiction

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on the federal courts.” Morongo Band of Mission Indians v. California State Bd. of Equalization,

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858 F.2d 1376, 1382 (9th Cir. 1988). “[S]uits against the government are barred by sovereign

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immunity absent an unequivocally expressed waiver.” Russell v. United States Dept. of the Army,

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191 F.3d 1016, 1018 (9th Cir. 1999). “Only Congress enjoys the power to waive the United States’

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sovereign immunity.” Dunn & Black, P.S. v. United States, 492 F.3d 1084, 1090 (9th Cir. 2007).

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Here, plaintiff argues that an email from an IRS attorney to plaintiff waived sovereign

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immunity when the IRS requested that plaintiff “interplead the funds in the U.S. District Court.”

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(Doc. #18). This is not a proper waiver of sovereign immunity. See Dunn & Black, P.S., 492 F.3d

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at 1090. Therefore, the court does not have jurisdiction over plaintiff’s Rule 22 action.

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendant United States

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of America’s motion to dismiss for lack of subject matter jurisdiction and for failure to state a claim

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(doc. #14) be, and the same hereby is, GRANTED.

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DATED April 6, 2012.

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UNITED STATES DISTRICT JUDGE
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James C. Mahan
U.S. District Judge

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