United States of America v. Jane Doe
MEMORANDUM OF DECISION AND ORDER - It is hereby ORDERED, that the Court, in its discretion, abstains from exercising jurisdiction over the instant action and the Plaintiffs Amended Complaint is dismissed without prejudice; and it is further ORDERED, that the clerk of the Court is respectfully direct to close this case. Ordered by Judge Arthur D. Spatt on 4/20/2013. (Coleman, Laurie)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA,
DECISION AND ORDER
-againstNANCY BLAKE, as personal representative for
the Estate of Ada Talbot, deceased,
U.S. Department of Justice, Tax Division
Attorneys for the Plaintiff
P.O. Box 55, Ben Franklin Station
Washington, DC 20044-0055
By: Bartholomew Cirenza, Trial Attorney
Gleich Siegel & Farkas
Attorneys for the Defendant
36 South Station Plaza
Great Neck, NY 11021
By: Lara Pouratian Emouna, Esq., of Counsel
SPATT, District Judge.
On May 22, 2012, the Plaintiff United States of America (“the Plaintiff”) commenced
this action seeking to collect an assessed federal estate tax from the Estate of Ada Talbot, now
deceased. In this regard, the United States of America seeks judgment against the defendant
Nancy Blake (“the Defendant”), as personal representative for the Estate of Ada Talbot,
deceased, in the amount of $456,775.68, plus accrued statutory additions computed from the date
of assessment until fully satisfied.
Presently pending before the Court is the Defendant’s motion to dismiss the Amended
Complaint pursuant to Federal Rules of Civil Procedure (“Fed. R. Civ. P.”) 12(b)(1) and/or
12(b)(6). In the alternative, the Defendant requests that this Court abstain from hearing this
action or stay this action pending final judgment in a related action pending in New York State
Supreme Court, Nassau County, entitled Nancy Blake v. United States of America, Index No.:
2010/003268 (“the Quiet Title Action”). For the reasons that follow, the Court abstains from
exercising jurisdiction and dismisses the Plaintiff’s action.
A. The Tax Assessments
On July 3, 1989, Ada Talbot (“Talbot”) died testate. (Cirenza Decl., Exh. A.) In her last
will and testament, in relevant part, Talbot appointed her daughter, Betty Blake (“Blake”) as
executrix of the last will and testament. (Cirenza Decl., Exh. B.) However, in the event Blake
died, failed to qualify, resigned or became incapable of acting, Talbot appointed her
granddaughter, the Defendant, as successor executrix. (Cirenza Decl., Exh. B.)
On June 4, 1991, a “United States Estate (and Generation Skipping Transfer) Tax
Return” form (“Form 706”) was filed with the United States Internal Revenue Service (“IRS”)
on behalf of Talbot’s Estate (“the Estate”). (Cirenza Decl., Exh. C.) Line 21 of Form 706
indicated a net estate tax liability of $253,590. (Cirenza Decl., Exh. C.) Line 28 of Form 706
indicated that this same amount, $253,590, was the balance due with the return. (Cirenza Decl.,
On July 29, 1991, the IRS made a tax assessment against the Estate for an estate tax in
the amount of $253,590.40. (Cirenza Decl., Exh. E.) On March 11, 1992, a “Revenue Officer
Report for the Special Procedures function of Proof of Claim Proceeding” form (“Form 4488)
was executed by IRS Revenue Officer Patricia Amari. (Cirenza Decl., Exh. E.) Form 4488
listed Blake as the executor and Stephen Gleich, whose firm now represents the Defendant, as
her attorney. (Cirenza Decl., Exh. E.) Form 4488 indicated that the unpaid balance on the July
29, 1991 tax assessment, including penalties and interest, was $374,123.79. (Cirenza Decl., Exh.
E.) According to Form 4488, the Estate had no liquid assets to provide for immediate payment
of the liability, and although the Estate was seeking a mortgage on property to provide partial
payment of the tax, full payment was not anticipated for a year. (Cirenza Decl., Exh. E.)
Starting on June 18, 1992 and continuing to March 10, 1993, the Estate through its
attorneys corresponded with the IRS concerning the outstanding estate tax liability of the Estate.
(Cirenza Decl., Exh. F.) In order to satisfy this outstanding estate tax liability, the Estate
represented that it was trying to obtain a mortgage loan for property owned by the Estate and
located in Kings County at the address 2235 Emmons Avenue, Brooklyn (“Premise One”).
*Cirenza Decl., Exh. F.) However, the Estate was encountering difficulties in securing the
financing. (Cirenza Decl., Exh. F.) The Estate also requested abatement of certain penalties and
transmitted minor payments to the IRS. (Cirenza Decl., Exh. F.)
On April 27, 1993, the IRS served Blake, in her capacity as executrix of the Estate, with a
“Proof of Claim for Internal Revenue Taxes” form (“Form 4490”). (Cirenza Decl., Exh. G.)
Form 4490 stated that the Estate was “justly and truly indebted to the United States in the
amount of $456,775.68 with interest.” (Cirenza Decl., Exh. G.) In this regard, Form 4490
provided that the amount of the estate tax was $231,481.46, the amount of the statutory penalties,
calculated to May 15, 1993, was $118,961.39 and the amount of the interest, also calculated to
May 15, 1993, was $106,332.83. (Cirenza Decl., Exh. G.) Form 4490 further provided that the
tax lien arose on July 29, 1991.
Form 4490 was accompanied by a letter, also dated April 27, 1993. (Cirenza Decl., Exh.
G.) The letter instructed Blake to acknowledge receipt by stamping or endorsing a duplicate
copy of Form 4490, which the IRS provided her, and returning the copy to the IRS in the
enclosed addressed and postpaid envelope. (Cirenza Decl., Exh. G.)
According to the Plaintiff’s opposition papers, the April 27, 1993 Form 4490 did not
result in immediate payment and on November 30, 1994, the IRS mailed Notices of Intent to
Levy to (1) Blake; (2) the Estate and Blake’s attorneys; and (3) the Estate and Blake’s CPA. (Pl.
Opp., pg. 4.) However, the Plaintiff provides no evidence to support these statements, nor makes
these factual allegations in its Amended Complaint.
On June 21, 1994, the IRS made another tax assessment against the Estate. (Cirenza
Decl., Exh. D.) In its opposition papers, the Plaintiff suggests that the June 21, 1994 tax
assessment against the Estate was for unpaid estate tax amounting to $54,838.00. (Pl. Opp., pg.
3.) Nevertheless, the Amended Complaint fails to even mention the estate tax liability that was
assessed by the IRS in connection with the June 21, 1994 tax assessment. In addition, the
Plaintiff and the Defendant have not offered any evidence regarding the amount of estate tax
liability assessed by the IRS on June 21, 1994.
On August 11, 1995, an “Installment Agreement” form (“Form 433-D”) was executed by
Wayne Foreman, CPA, on behalf of the Estate. (Cirenza Decl., Exh. H.) Under the Installment
Agreement, the Estate agreed to pay the estate tax liability—by then $560,214.98 plus accruals—
by making monthly payments in the amount of $2,500 by the 11th of every month. (Cirenza
Decl., Exh. H.) However, for the November 11, 1995 payment, the Estate agreed to pay $12,500
instead of $2,500. (Cirenza Decl., Exh. H.)
B. The Estate’s Default on the Installment Agreement and the Notices of Federal Tax Liens
On June 19, 2005, Blake died. (Cirenza Decl., Exh. I.) According to the Plaintiff, the
IRS was never informed of Blake’s death and, thereafter, the Estate defaulted on the Installment
Agreement and its estate tax liability remained unsatisfied. (Pl. Opp., pg. 4.) Prior to her death,
on June 17, 2005, IRS Technical Service Advisor Michael J. Seidita (“Seidita”) had sent a letter
to Blake advising her that the outstanding balance due to the IRS was $1,110,586.40 and
demanding full payment within 30 days of the date of the letter. (Cirenza Decl., Exh. J.) Seidita
also informed Blake that he had filed appropriate Notices of Federal Tax Liens to protect the
Plaintiff’s interest. (Cirenza Decl., Exh. J.) A copy of the June 17, 2005 letter was sent to the
Defendant. (Cirenza Decl., Exh. J.) The letter did not clarify whether it was being sent to the
Defendant in her individual capacity or in her capacity as a personal representative of the Estate.
(Cirenza Decl., Exh. J.)
The two properties that were subject to the abovementioned Notices of Federal Tax Liens
are presently owned by the Defendant in fee simple. (Emouna Aff., Exh. A.) The first of these
premises is Premise One. (Cirenza Decl., Exh. J.; Emouna Aff. Exh. A.)
acquired her fee interest in Premise One by virtue of three deeds. (Emouna Aff., Exh. A.) The
first deed was made and delivered on or about November 17, 2004 and was recorded in the
Office of the Kings County City Register on January 28, 2005. (Emouna Aff., Exh. A.) The
second deed was made and delivered on or about January 6, 2010 and was recorded in the Office
of the Kings County City Register on January 12, 2010. (Emouna Aff., Exh. A.) Finally, the
third deed was made and delivered on or about January 6, 2010 and was recorded in the Office of
the Kings County Register on January 19, 2010. (Emouna Aff., Exh. A.)
The second premise is located in Nassau County at the address 74 Laurel Avenue, Sea
Cliff (“Premise Two”). (Cirenza Decl., Exh. J.; Emouna Aff., Exh. A.) The Defendant acquired
her fee interest in Premise Two by virtue of three deeds. (Emouna Aff., Exh. A.) The first deed
was made and delivered on or about November 17, 2004 and was recorded in the Office of the
Nassau County Clerk on January 5, 2005. (Emouna Aff., Exh. A.) The second and third deeds
were made and delivered on or about January 6, 2010 and were recorded in the Office of the
Nassau County Clerk on January 13, 2010. (Emouna Aff., Exh. A.)
By virtue of the Notices of Federal Tax Lien, which were filed in the Office of the
Nassau County Clerk and the Office of the Kings County City Register, the Plaintiff claimed an
interest in Premise One and Premise Two adverse to that of the Defendant. (Emouna Aff., Exh.
A.) These Notices were filed against the Estate, as well as Blake and the Defendant, each in
their capacity as executrix of the Estate. (Emouna Aff., Exh. A.) With respect to Premise One, a
Notice of Federal Tax Lien was filed on or about April 6, 2004. (Emouna Aff., Exh. A.) As for
Premise Two, a Notice of Federal Tax Lien was filed on or about April 22, 2004. (Emouna Aff.,
Exh. A.) Both these Notices included the unpaid balance from the July 29, 1991 and June 2,
1994 assessments. (Emouna Aff., Exh. A.)
However, on June 1, 2009, it appears that the IRS partially revoked the Federal Tax Liens
placed on Premises One and Two through the execution of two “Revocation of Certificate of
Release of Federal Tax Lien” forms (“Form 12474-A”) . (Emouna Aff., Exh. A.) The “reason
for revoking the certificate of release and reinstating the notice of federal tax lien” was that the
“Notice of Federal Tax Lien was not timely filed.” (Emouna Aff., Exh. A.) Thereafter, on June
25, 2009 and June 29, 2009, the IRS filed Notices of Federal Tax Lien with the Office of the
Nassau County Clerk and the Office of the Kings County Register with respect to Premise One.
(Emouna Aff., Exh. A.) These 2009 Notices only listed the unpaid balance from the June 2,
1994 estate tax assessment, and not the July 29, 1991 estate tax assessment. (Emouna Aff., Exh.
C. The Quiet Title Action
On February 18, 2010, the Defendant, in her individual capacity, commenced an action
against the Plaintiff by filing a verified complaint in the Supreme Court of the State of New
York, County of Nassau (“the Quiet Title Action”). (Emouna Aff., Exh. A.) In the verified
complaint, the Defendant alleged “that any claims to, or lien against, [Premise One and Premise
Two] that [the Plaintiff] may make are invalid and of no force and effect to the extent that, inter
alia, [the Plaintiff] and/or the [IRS] are time-barred from asserting said claims or liens.”
(Emouna Aff., Exh. A.) Thus, the Defendant sought to quite title to Premise One and Premise
Two. (Emouna Aff., Exh. A.) In this regard, the Defendant sought to forever bar the Plaintiff
from all claims to an estate or interest in Premise One or Premise Two. (Emouna Aff., Exh. A.)
She also requested a judicial determination that (1) she was the lawful owner of Premises One
and Two; (2) she was vested with an absolute and unencumbered title and fee to Premises One
and Two; and (3) Premise One and Premise Two were not subject to any liens of the Plaintiff or
the IRS. (Emouna Aff., Exh. A.) Lastly, the Defendant sought to be awarded sole and complete
possession of Premise One and Premise Two and to remain in possession of both premises.
(Emouna Aff., Exh. A.)
According to the parties, the Defendant moved for a default judgment against the Plaintiff
in the Quiet Title Action. (Emouna Aff., ¶ 6; Pl. Opp., pg. 4.) Thereafter, the Plaintiff opposed
to the Defendant’s motion for a default judgment and filed an answer to the verified complaint.
(Emouna Aff., ¶ 7; Pl. Opp., pg. 4.) By short order dated March 29, 2011, the Supreme Court of
Nassau County (Iannacci, J.) denied the Defendant’s motion for a default judgment. (Emouna
Aff., ¶ 7; Pl. Opp., pg. 4.) The March 29, 2011 Order was appealed to the New York State
Appellate Division, Second Judicial Department (“Second Department”). (Emouna Aff., ¶ 7; Pl.
Opp., pgs. 4–5.) At the time of the parties’ filings in this case on the present motion to dismiss,
the Second Department had yet to issue a decision with respect to the March 29, 2011 Order.
(Emouna Aff., ¶ 7; Pl. Opp., pgs. 4–5.)
As of December 4, 2012, the Quiet Title Action was still being actively litigated before
the Supreme Court of Nassau County. (Emouna Aff., Exh. B; Emouna Rep. Aff., Exhs. A and
B.) The Plaintiff never removed the Quiet Title Action to federal court pursuant to 28 U.S.C. §§
1441 and 1446.
D. Procedural History in the Present Action
On May 22, 2012, while the Quiet Title Action was being litigated, the Plaintiff
commenced this action. In its Original Complaint, the Plaintiff did not name the Defendant, but
instead named “Jane Doe, as personal representative for the Estate of Ada Talbot, deceased,” as
the Defendant had not yet been appointed by the New York State Surrogate’s Court for Kings
County, New York. (Orig. Compl., ¶ 9.) The Original Complaint alleged that “Blake, in her
capacity as executrix for the Estate . . . failed, refused, or neglected to pay the amount of the [tax]
assessment” from July 29, 1991 (Orig. Compl., ¶¶5–6.) It also alleged that no action had been
taken by the New York State Surrogate’s Court with respect to the IRS’s April 27, 1993 Form
4490, discussed above. (Orig. Compl., ¶¶ 7–8.) The Original Complaint did not mention the
June 2, 1994 tax assessment.
On September 17, 2012, the Plaintiff requested that this Court issue an order extending,
by 61 days, the time within which the Plaintiff could serve the Defendant. On September 24,
2012, the Court granted the Plaintiff’s request, thereby extending the Plaintiff’s time to serve the
defendant from September 19, 2012 to November 19, 2012. Thereafter, on October 4, 2012, the
Plaintiff filed the Amended Complaint, naming the Defendant, in her capacity as the successor
representative for the Estate, as a party in this action. By that time, the Defendant had been
appointed as administrator by the New York State Surrogate’s Court. (Amen. Compl., ¶ 10.)
A. Legal Standard on a Fed. R. Civ. P. 12(b)(1) Motion to Dismiss
“A case is properly dismissed for lack of subject matter jurisdiction under [Fed. R. Civ.
P.] 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.”
Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). In addition, “[a] motion to dismiss
based on the abstention doctrine is also considered as a motion made pursuant to Rule 12(b)(1).”
City of New York v. Milhelm Attea & Bros., Inc., 550 F. Supp. 2d 332, 341–42 (E.D.N.Y.
The standard for reviewing a Fed. R. Civ. P. 12(b)(1) motion to dismiss is essentially
identical to the Fed. R. Civ. P. 12(b)(6) standard, discussed below, except that “[a] plaintiff
asserting subject matter jurisdiction has the burden of proving by a preponderance of the
evidence that it exists.” Id. at 113. In adjudicating a motion to dismiss for lack of subject matter
jurisdiction pursuant to Rule 12(b)(1), the court may consider matters outside the pleadings.
Makarova, 201 F.3d at 113.
With respect to the abstention doctrine, “[a]bstention from the exercise of federal
jurisdiction is the exception, not the rule.” Colorado River Water Conservation District v.
United States, 424 U.S. 800, 813, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976). Indeed, “[t]he
abstention doctrine comprises a few ‘extraordinary and narrow exception[s]’ to a federal court’s
duty to exercise its jurisdiction.” Woodford v. Cmty. Action Agency of Greene County, Inc.,
239 F.3d 517, 522 (2d Cir. 2001) (quoting Colorado River, 424 U.S. at 813). Abstention is
appropriate (1) “in cases presenting a federal constitutional issue which might be mooted or
presented in a different posture by a state court determination of pertinent state law”; (2) “where
there have been presented difficult questions of state law bearing on policy problems of
substantial public import whose importance transcends the result in the case then at bar”; and (3)
“where, absent bad faith, harassment, or a patently invalid state statue, federal jurisdiction has
been invoked for the purpose of restraining state criminal proceedings.” Colorado River, 424
U.S. at 814–17.
In addition, relevant to the instant case, in Colorado River Water Conservation District v.
United States, 424 U.S. at 817, the Supreme Court carved out a fourth category in which
abstention is appropriate. In this regard, while “[g]enerally, as between state and federal courts,
the rule is that the pendency of an action in the state court is no bar to proceedings concerning
the same matter in the Federal court having jurisdiction,” id. at 817, “[u]nder the Colorado River
exception the court may abstain in order to conserve federal judicial resources,” Woodford, 239
F.3d at 522. However, the Colorado River exception only permits abstention “in ‘exceptional
circumstances,’ where the resolution of existing concurrent state-court litigation could result in
‘comprehensive disposition of litigation.’” Id. (quoting Colorado River, 424 U.S. at 813, 817).
As such, unlike other doctrines of abstention which are premised on the careful balance between
federal and state power, Colorado River mainly concerns the conservation of judicial resources.
Before engaging in the analysis of whether to abstain under Colorado River, a court must
determine if the concurrent state and federal proceedings are parallel. Dittmer v. Cnty. of
Suffolk, 146 F.3d 113, 118 (2d Cir. 1998). Cases are considered “parallel” when “the main issue
in the case is the subject of already pending litigation.” GBA Contr. Corp. v. Fidelity & Deposit
Co., 00 Civ. 1333 (SHS), 2001 U.S. Dist. LEXIS 32, at *3 (S.D.N.Y. Apr. 23, 2001).
Only if the federal and state cases are parallel, do courts consider a six-factor test to
determine if abstention is appropriate under Colorado River, namely: (1) whether the controversy
involves a res over which one of the courts has assumed jurisdiction; (2) whether the federal
forum is less inconvenient than the other for the parties; (3) whether staying or dismissing the
federal action will avoid piecemeal litigation; (4) the order in which the actions were filed and
whether proceedings have advanced more in one forum than in the other; (5) whether federal law
provides the rule of decision; and (6) whether the state procedures are adequate to protect the
plaintiff’s federal rights. Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
22–27, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983); Colorado River, 424 U.S. at 818.
None of the abovementioned factors “is necessarily determinative,” and “a carefully
considered judgment taking into account both the obligation to exercise jurisdiction and the
combination of factors counseling against that exercise is required.” Moses H. Cone, 460 U.S. at
15–16 (quoting Colorado River, 424 U.S. at 818–19, 96 S. Ct. 1236). However, the Supreme
Court has cautioned that “[o]nly the clearest of justifications will warrant dismissal.” Id. at 16
(quoting Colorado River, 424 U.S. at 818–19). Thus, “[a]lthough the decision whether to abstain
on Colorado River grounds is committed to the district court’s discretion,” Woodford, 239 F.3d
at 523, the Court’s analysis is “heavily weighted in favor of the exercise of jurisdiction,” Moses
Cone, 460 U.S. at 16.
B. Legal Standard on a Fed. R. Civ. P. 12(b)(6) Motion to Dismiss
Under the now well-established Twombly standard, a complaint should be dismissed
pursuant to Fed. R. Civ. P. 12(b)(6) only if it does not contain enough allegations of fact to state
a claim for relief that is “plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127
S. Ct. 1955, 167 L. Ed. 2d 929, 570 (2007). Indeed, the issue on a motion to dismiss is “not
whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to
support the claims.” Todd v. Exxon Corp., 275 F.3d 191, 198 (2d Cir. 2001) (quoting Scheuer v.
Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974)).
The Second Circuit has explained that, after Twombly, the Court’s inquiry under Rule
12(b)(6) is guided by two principles. Harris v. Mills, 572 F.3d 66 (2d Cir. 2009) (citing Ashcroft
v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009)). “First, although ‘a
court must accept as true all of the allegations contained in a complaint,’ that ‘tenet’ ‘is
inapplicable to legal conclusions,’ and ‘[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.’” Id. at 72 (quoting Iqbal, 129 S. Ct. at
1949). “‘Second, only a complaint that states a plausible claim for relief survives a motion to
dismiss’ and ‘[d]etermining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience and
common sense.’” Id. (quoting Iqbal, 129 S. Ct. at 1950). Thus, “[w]hen there are well-pleaded
factual allegations, a court should assume their veracity and . . . determine whether they
plausibly give rise to an entitlement of relief.” Iqbal, 129 S. Ct. at 1950.
In considering a motion to dismiss, this Court accepts as true the factual allegations set
forth in the complaint and draws all reasonable inferences in the Plaintiff’s favor. Zinermon v.
Burch, 494 U.S. 113, 118, 110 S. Ct. 975, 979, 108 L. Ed. 2d 100 (1990); In re NYSE Specialists
Secs. Litig., 503 F.3d 89, 91 (2d Cir. 2007). Only if this Court is satisfied that “the complaint
cannot state any set of facts that would entitle the plaintiff to relief will it grant dismissal
pursuant to Rule 12(b)(6).” Hertz Corp. v. City of N.Y., 1 F.3d 121, 125 (2d Cir. 1993).
C. As to Whether Dismissal of this Action is Warranted pursuant to Fed. R. Civ. P.
12(b)(1) and 12(b)(6) and the New York Surrogate’s Court Procedure Act
The Defendant in this action first argues that the Plaintiff’s action must be dismissed
because this Court does not have subject matter jurisdiction under the “probate exception.” (Def.
Mem., pg. 3–5.) This exception “has been described as ‘one of the most mysterious and esoteric
branches of the law of federal jurisdiction.’” Ashton v. Paul, 918 F.2d 1065, 1071 (2d Cir. 1990)
(citing Dragan v. Miller, 679 F.2d 712, 713 (7th Cir. 1982)); see also Cadle Co. v. D’Addario,
Civil NO. 3:01CV1103(AHN), 2005 U.S. Dist. LEXIS 38394, at *10 (D. Conn. Dec. 20, 2005).
Under this exception, “probate matters are excepted from the scope of federal diversity
jurisdiction.” Kennedy v. Trs. of the Testementary Trust, 406 F. App’x 507, 509 (2d Cir. 2010)
(quoting Lefkowitz v. Bank of New York, 528 F.3d 102, 105 (2d Cir. 2007)) (internal quotation
marks omitted); see also Dulce v. Dulce, 233 F.3d 143, 145 (2d Cir. 2000) (quoting Markham v.
Allen, 326 U.S. 490, 494, 90 L. Ed. 256, 66 S. Ct. 296 (1946)) (“[A] federal court has no
jurisdiction to probate a will or administer an estate.”).
Of importance, “the probate exception is narrow, and should not be used as an excuse to
decline to exercise jurisdiction over actions merely because they involve a ‘probate related
matter.’” Marcus v. Quattrocchi, 715 F. Supp. 2d 524, 531 (S.D.N.Y. 2010) (citing Marshall v.
Marshall, 547 U.S. 293, 126 S. Ct. 1735; 164 L. Ed. 2d 480 (2006)). In this regard, the Supreme
Court has recognized that under the probate exception, “federal courts have jurisdiction to
entertain suits to determine the rights of creditors, legatees, heirs, and other claimants against a
decedent’s estate, ‘so long as the federal court does not interfere with the probate proceedings.’”
Marshall, 547 U.S. at 311 (quoting Markham, 326 U.S. at 494). However, the Supreme Court
explained that “the ‘interference’ language” found in the phrase “interfere with the probate
proceedings” should be understood to simply be “a reiteration of the general principle that, when
one court is exercising in rem jurisdiction over a res, a second court will not assume in rem
jurisdiction over the same res. . . [and] not [as a] bar [on] federal courts from adjudicating
matters outside those confines and otherwise within federal jurisdiction.” Marshall, 547 U.S. at
“[D]etermining whether a case falls within the probate exception involves a two-part
inquiry[.]” Marcus, 715 F. Supp. 2d at 532 (citations and internal quotation marks and
alterations omitted). First, a court must determine “whether the action requires the probate or
annulment of a will or the administration of a decedent’s estate.” Id. Then, a court must inquire
“whether the action requires the court to dispose of property that is in the custody of a state
probate court.” Id.
As an initial matter, as suggested above, see Kennedy, 406 F. App’x at 509, the probate
exception typically applies to diversity cases. However, the Plaintiff in this case does not assert
federal diversity jurisdiction. Rather, the Plaintiff asserts that “[j]urisdiction over the instant
action is conferred upon [this Court] pursuant to 26 U.S.C., Section 7402 and 28 U.S.C.,
Sections 1340 and 1345.” (Amend. Compl., ¶ 1.) Under § 1340, “[t]he district courts  have
original jurisdiction of any civil action arising under any Act of Congress providing for internal
revenue, or revenue from imports or tonnage except matters within the jurisdiction of the Court
of International Trade.” In addition, § 1345 provides that “[e]xcept as otherwise provided by Act
of Congress, the district courts shall have original jurisdiction of all civil actions, suits or
proceedings commenced by the United States, or by any agency or officer thereof expressly
authorized to sue by Act of Congress.”
It appears to the Court that “neither the Supreme Court nor the [Second] Circuit has ever
determined that there exists any uncodified probate exception to a federal court’s jurisdiction
over an enforcement action under the Internal Revenue Code.” United States v. Tyler, CIVIL
ACTION No. 10-1239, 2012 U.S. Dist. LEXIS 34093, at *10 (E.D. Pa. 2012). Moreover, “it is
unclear if the probate exception even applies to federal question cases [,] . . . [as] the courts of
appeals are currently split on this very issue.” Id. In this regard, the Seventh Circuit and the
Sixth Circuit have determined that the probate exception is applicable in both federal question
and diversity cases. See Jones v. Brennan, 465 F.3d 304, 306–09 (7th Cir. 2006) (finding that
the probate exception is as applicable to federal question cases as it is to the diversity cases in
which it is usually invoked); Tonti v. Petropoulous, 656 F.2d 212, 215 (6th Cir. 1981) (finding
that “the federal courts have no probate jurisdiction” in a 42 U.S.C. § 1983 action). However, on
the other hand, the Eleventh Circuit has held that the probate exception “relates only to 28 U.S.C.
§ 1332 (1982), and has no bearing on federal question jurisdiction.” In re Goerg, 844 F.2d 1562,
1565 (11th Cir. 1988). In addition, while “[t]he Ninth Circuit also determined that the probate
exception applies to both federal question and diversity cases[,] In re Marshall, 392 F.3d 1118,
1131–32 (9th Cir. 2004)[,] [t]he Supreme Court subsequently reversed the Ninth Circuit on other
grounds and . . . declined to consider ‘whether there exists any uncodified probate exception to
federal bankruptcy jurisdiction[,]’ [Marshall, 547 U.S. at 308–09].” Tyler, 2012 U.S. Dist.
LEXIS at *12 n. 6.
Here, however, the Court finds that it need not resolve whether the probate exception
extends to §§ 1340 and 1345 jurisdiction in this case, because even if the probate exception was
applicable, the Defendant’s reliance on the probate application in this case is misplaced. In this
regard, it appears that the Defendant suggests that the probate exception is applicable by pointing
to §§ 1806 and 1810 of the New York Surrogate’s Court Procedure Act (“SCPA”). Under §
1810, a claimant may “commenc[e] an action on his claim at law or in equity, provided that
where a claim has been presented and rejected or deemed rejected pursuant to [§] 1806 in whole
or in part the action must be commenced within 60 days after such rejection.” In relevant part,
SCPA § 1806(3) provides that “[i]f the fiduciary shall fail to allow the claim within 90 days from
the date that it has been presented to him, the claim shall be deemed to have been rejected.” As
such, the Defendant argues that the time in which this Court could have exercised its jurisdiction
has lapsed, because (1) the April 27, 1993 Form 4490 that was served on Blake was a proof of
claim; (2) this proof of claim was rejected because Blake failed to allow such claim within 90
days after it had been served and (3) the Plaintiff failed to commence this action within 60 days
of the rejection of the proof of claim.
Thus, the Defendant’s reasoning concedes that the Plaintiff was permitted to bring the
present action in this Court and only challenges the timing of the Plaintiff’s action. However,
“the Second Circuit has held that the probate exception is only available when ‘under state law
the dispute would be cognizable only by a probate court.’” Days Inn Worldwide, Inc. v. Hazard
Mgmt. Group, 10 Civ. 7545 (CM)(KNF), 2012 U.S. Dist. LEXIS 163489, at *4–5 (S.D.N.Y.
Nov. 13, 2012) (quoting Lamberg v. Callahan, 455 F. 2d 1213, 1216 (2d Cir. 1972)).
Accordingly, putting aside whether the Defendant may raise a statute of limitations challenge in
this case, the Court finds that the Defendant cannot challenge jurisdiction based on the probate
exception, because, as the Defendant acknowledges, New York State law does not limit
jurisdiction of the Plaintiff’s claim to the Surrogate’s Court.
D. As to Whether this Court Should Abstain from Exercising Jurisdiction Over the Instant
Action Under Colorado River Abstention
The Defendant also argues that due to the Quiet Title Action, this Court should abstain
from hearing this action under the abstention doctrine laid out in the Supreme Court’s decision in
Colorado River. In contrast, the Plaintiff claims that “this action is completely different than [the
Defendant’s] state-court action [brought in her individual capacity] and should not be a basis for
any abstention or stay of proceedings in this action.” (Pl. Opp., pg. 12.) The Court disagrees
with the Plaintiff and finds Colorodo River abstention appropriate in this case.
As set forth in the legal standard section above, in determining whether to apply
Colorado River abstention, the Court must first make the threshold determination as to whether
the federal and state court cases are “parallel.” Dittmer v. Cnty. of Suffolk, 146 F.3d 113, 118
(2d Cir. 1998) (“[A] finding that the concurrent proceedings are ‘parallel’ is a necessary
prerequisite to abstention under Colorado River.”). In this regard, “‘[f]ederal and state
proceedings are “concurrent” or “parallel” for purposes of abstention when the two proceedings
are essentially the same; that is, there is an identity of parties, and the issues and relief sought are
the same.’” Abercrombie v. College, 438 F. Supp. 2d 243, 258 (S.D.N.Y. 2006) (quoting Nat’l
Union Fire Ins. Co. of Pittsburgh v. Karp, 108 F.3d 17, 22 (2d Cir. 1997)). However, of
importance, “[p]erfect symmetry of parties and issues is not required. Rather, parallelism is
achieved where there is a substantial likelihood that the state litigation will dispose of all claims
presented in the federal case.” In re Comverse Tech., Inc., No. 06 Civ. 1849, 2006 U.S. Dist.
LEXIS 80195, at *6 (E.D.N.Y. Nov. 2, 2006) (citing Clark v. Lacy, 376 F.3d 682, 686 (7th Cir.
2004)) (emphasis in original) (internal citation omitted).
“Any doubt regarding the parallel nature of a federal and state action should be resolved
in favor of the exercise of federal jurisdiction.” In re Comverse Tech., Inc., 2006 U.S. Dist.
LEXIS 80195 at *6 (citing AAR Int’l, Inc. v. Nimelias Enters. S.A., 250 F.3d 510, 520 (7th Cir.
2001)). If a court finds that the federal and state cases are not parallel, “Colorado River
abstention does not apply, whether or not issues of state law must be decided by the federal
court.” In re Comverse Tech., Inc., 2006 U.S. Dist. LEXIS 80195, at *12.
The fundamental issue in the case before the Court is whether the Plaintiff can enforce
the 1991 estate tax assessment against the Estate. Similarly, in the Quiet Title Action, the state
court must resolve the validity of the Plaintiff’s claim based on the 1991 estate tax assessment.
Both the instant case and the Quiet Title Action require a determination with respect to whether
the Plaintiff is time-barred from asserting its claim to collect the 1991 estate tax. Hence, even
though the Quiet Title Action and this action might not share “[p]erfect symmetry of parties,” in
that the Defendant brought the Quiet Title Action in her individual capacity but is a party here in
her capacity as a personal representative for the Estate, this Court still finds that the actions are
parallel in nature due to the fact that resolution of the Quiet Title Action will undoubtedly
resolve the Plaintiff’s claim in this action. In re Comverse Tech., Inc., 2006 U.S. Dist. LEXIS
80195 at *6.
Since the Quiet Title Action and the instant action appear to be parallel, the Court will
now analyze the Colorado River factors in order to determine whether abstention is appropriate
in this case. To reiterate, “[t]he six factors to be considered are: (1) whether the controversy
involves a res over which one of the courts has assumed jurisdiction; (2) whether the federal
forum is less inconvenient than the other for the parties; (3) whether staying or dismissing the
federal action will avoid piecemeal litigation; (4) the order in which the actions were filed, and
whether proceedings have advanced more in one forum than in the other; (5) whether federal law
provides the rule of decision; and (6) whether the state procedures are adequate to protect the
plaintiff’s federal rights.” Pabco Constr. Corp. v. Allegheny Millwork PBT, 12 Civ. 7713, 2013
U.S. Dist. LEXIS 51815, at *6–7 (S.D.N.Y. Apr. 10, 2013) (citing Woodford v. Cmty. Action
Agency of Greene Cnty., Inc., 239 F.3d 517, 522 (2d Cir. 2001) (in turn, Moses H. Cone Mem’l
Hosp. v. Mercury Const. Corp., 460 U.S. 1, 22, 23, 25–27, 103 S. Ct. 927, 74 L. Ed. 2d 765
(1983), and Colorado River, 424 U.S. at 818)).
A review of these factors supports the Court abstaining from hearing this case. In this
regard, as an initial matter, the Court acknowledges that with respect to the factors involving (1)
inconvenience of the federal forum and (2) the protection of the rights of the party seeking to
invoke federal jurisdiction, that these factors are facially neutral and would thus indicate that
abstention is inappropriate here. See Niagara Mohawk Power Corp. v. Hudson River-Black
River Regulating Dist., 673 F.3d 84, 101 (2d Cir. 2012) (“Where a Colorado River factor is
facially neutral, that is a basis for retaining jurisdiction, not for yielding it.”) (citation and
internal quotation marks omitted). More specifically, neither the state nor the federal forum
appears to be more convenient. Furthermore, the Court does not doubt that the state court
proceeding will adequately protect the rights of both the parties, including the Plaintiff. The
Plaintiff has raised no argument to suggest otherwise. Nevertheless, the Court finds, in its
discretion, that the remaining factors establish “‘exceptional’ circumstances, the ‘clearest of
justifications,’ that can suffice under Colorado River to justify the surrender of that jurisdiction.”
Eastern Sav. Bank v. Estate of Kirk, 821 F. Supp. 2d 543, 547 (E.D.N.Y. 2011) (citing Moses H.
Cone, 460 U.S. at 25–26) (emphasis in the original).
First, the dispute between the parties involves a res over which the state court had
already assumed jurisdiction in the Quiet Title Action before the Plaintiff even commenced the
instant action. Indeed, the Quiet Title Action concerns real property and resolution of the
Plaintiff’s claim will ultimately settle each party’s claims to Premise One and Premise Two.
This weighs strongly in favor of abstention here, as “[t]he Second Circuit has held that
jurisdiction over the res can be dispositive when applying Colorado River.” Credit-Based Asset
Servicing & Securitization, LLC v. Lichtenfels, 658 F. Supp. 2d 355, 361 (D. Conn. 2009)
(citing F.D.I.C. v. Four Star Holding Co., 178 F.3d 97, 101 (2d Cir. 1999)).
Second, abstaining will avoid duplicative and piecemeal litigation and, hence, conserve
federal judicial resources. The Plaintiff argues “a determination concerning enforcement of the
federal tax liability in this Court will not result in any piecemeal litigation,” because “this
Court’s determination of enforcement of the federal tax liability will moot the need for any
further determination concerning [the Defendant’s] state-court [Q]uiet [T]itle [A]ction.” (Pl.
Opp., pg. 12.) By arguing that resolution of the instant action will moot the Quiet Title Action,
the Plaintiff essentially concedes that both cases fundamentally concern the same issues.
Moreover, the Plaintiff overlooks the fact that the Quiet Title Action concerns not just the 1991
estate tax assessment, but also the 1994 estate tax assessment. Consequently, resolution of the
Plaintiff’s claim in this Court will fail to resolve all the issues presented in the Quiet Title
Action. As such, if the Court declines to abstain, the parties will not only be required to litigate
issues duplicative as those presented in the Quiet Title Action, but they will also need to continue
litigating the Quiet Title Action even if a resolution is reached in this case. In contrast, of
importance, resolution of the Quiet Title Action will resolve all disputes between the parties.
Third, the Quiet Title Action was commenced in the state court on February 18, 2010,
more than two years prior to the commencement of the instant action. As a result, the parties
have already exchanged written discovery and have conducted depositions, including the
depositions of the Defendant and representatives for the IRS. (Emouna Aff., ¶ 8.) In addition,
the state court’s March 29, 2011 order, which denied the Defendant’s motion for default
judgment, is currently being considered on appeal by the Second Department. (Emouna Aff., ¶
7.) Indeed, the appeal before the Second Department has already been fully briefed and the
parties are awaiting a date for oral argument. (Emouna Aff., ¶ 7.) Also, of importance, the
Plaintiff could have removed the Quiet Title Action to Federal Court pursuant to 28 U.S.C. §§
1441 and 1446, but failed to do so. See Machat v. Sklar, 96 Civ. 3796 (SS), 1997 U.S. Dist.
LEXIS 14803, at *17 (S.D.N.Y. Sept. 25, 1997) (“[The Plaintiff’s] failure to properly remove
weighs heavily in favor of abstention.”) (citing Continental Airlines, Inc. v. Goodyear Tire and
Rubber Co., 819 F.2d 1519, 1524 (9th Cir. 1987)); Nancy Johnson Corp. v. Valvo, No. 90 Civ.
1364 (JSM), 1990 U.S. Dist. LEXIS 7320, at *3–4 (S.D.N.Y. June 15, 1990) (finding “that
considerations of wise judicial administration, giving regard to conservation of judicial resources
and comprehensive disposition of litigation, dictate[d] the dismissal of defendants’
counterclaims,” because, in part, the defendants failed to remove the state court action to the
federal district court within the time frame permitted by 28 U.S.C. § 1446) (citing Colorado
River, 424 U.S. at 817) (internal quotation marks omitted).
Finally, while resolution of the instant action will depend in part on the application of
federal tax law with respect to the 10-year statute of limitations period, it will also rely heavily
on the application of New York State law. In relevant part, under 26 U.S.C. § 6502(a), “[w]here
the assessment of any tax . . . has been made . . . , such tax may be collected by levy or by a
proceeding in court, but only if the levy is made or the proceeding begun . . . within 10 years
after the assessment of the tax[.]” However, “[i]f a timely proceeding in court for the collection
of a tax is commenced, the period during which such tax may be collected by levy shall be
extended and shall not expire until the liability for the tax (or a judgment against the taxpayer
arising from such liability) is satisfied or becomes unenforceable.” 26 U.S.C. § 6502(a). In
addition, 26 U.S.C. § 6503(b) provides that “[t]he period of limitations on collection after
assessment prescribed in [§] 6502 . . . shall be suspended for the period the assets of the taxpayer
are in the control or custody of the court in any proceeding before any court of the United States
or of any State or of the District of Columbia, and for 6 months thereafter.”
Although the ten-year statute of limitation period for collecting a tax is governed by
federal law, the ultimate determination of the Plaintiff’s claim here will be determined by the
application of New York State law. This is because the Plaintiff asserts that, in accordance with
§ 6502(a), it properly commenced a proceeding under New York State law by serving Blake with
the Form 4490 on April 27, 1993. (Pl. Opp., pgs. 8–9). Thus, the Court will need to look to
New York State law in order to determine whether, under New York State Law, the Plaintiff’s
service of the Form 4490 constituted the commencement of a timely proceeding to collect the tax
so as to extend § 6502(a)’s ten-year statute of limitation period. Indeed, in making its argument,
even the Plaintiff cites to a decision of the New York State Court of Appeals (“the Court of
Appeals”), which held that “in New York it is settled law that the filing of a verified claim with
the representative of an estate is the first step toward having the claim tried and determined and it
is viewed as the commencement of a special proceeding that tolls the statutory period of
limitations.” In re Estate of Feinberg, 18 N.Y.2d 499, 507 223 N.E.2d 780, 783 (1966) (citations
and internal quotation marks omitted). The Court of Appeals further held that “when, under
State law, a notice of claim would be regarded as the first step toward judicial settlement of the
claim, a notice of claim for unpaid Federal taxes has been held to toll the Statutes of Limitation
prescribed by the Internal Revenue Code.” Id. at 254; see also United States v. Warner, No. 83
CIV 3717 (LBS), 1985 U.S. Dist. LEXIS 15859, at *9 (S.D.N.Y. 1985) (citing to Feinberg, 18
N.Y.2d at 254). Therefore, the Plaintiff appears to suggest that, under New York State law,
Form 4490 operated as a notice of claim or verified claim. In this respect, the Plaintiff’s
assertion that it is not time-barred from enforcing the tax lien against the Defendant’s property
requires an analysis of New York State Law.
Similarly, New York State law considerations underlie the Plaintiff’s argument for a
statutory suspension to the 10-year statute of limitations period under § 6503(b). In particular,
relying on SCPA § 201(3), the Plaintiff claims that “the 10-year statutory period of limitations
was suspended and the assessment liens by the [IRS] against the [E]state are still valid,” because
“there has been no final accounting approved by the Surrogate’s [C]ourt with respect to the
[E]state.” (Pl. Opp., pgs. 9–10.) However, to determine whether the Surrogate’s Court still
controls or has custody of the assets of the Estate will in the rest on the application of the SCPA
to the facts at issue in both this case and the Quiet Title Action.
Accordingly, in light of (1) the fact that the parties’ dispute involves a res over which the
state court has assumed jurisdiction; (2) the duplicative nature of the instant action with the Quiet
Title Action; (3) the likelihood of piecemeal litigation and the waste of federal judicial resources
if the instant action is permitted to proceed; (4) the Plaintiff’s failure to remove the Quiet Title
Action to federal court; (5) the fact that the Quiet Title Action was commenced more than two
years prior to the instant action and has been actively litigated; and (6) the need to apply state
law to ultimately determine the outcome of the Plaintiff’s claim, the Court, in its discretion,
abstains from exercising jurisdiction under Colorado River and dismisses the Plaintiff’s action.
E. As to Whether the Instant Action Should be Dismissed Pursuant to Fed. R. Civ. P.
12(b)(1) and 12(b)(6) because the Plaintiff’s Claim is Time-Barred
The Defendant here asserts that the Plaintiff’s action is barred by statute of limitations
and therefore must be dismissed pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). In making
this assertion, the Defendant relies on the same argument she made in challenging this Court’s
jurisdiction based on the probate exception, as discussed above. However, because the Court has
abstained from hearing the instant action and the issue of whether the Plaintiff’s claim is timebarred is the essential issue in the Quiet Title Action, the Court declines to issue any ruling with
respect to this matter.
For the foregoing reasons, it is hereby
ORDERED, that the Court, in its discretion, abstains from exercising jurisdiction over the
instant action and the Plaintiff’s Amended Complaint is dismissed without prejudice; and it is
ORDERED, that the clerk of the Court is respectfully direct to close this case.
Dated: Central Islip, New York
April 20, 2013
____/s/ Arthur D. Spatt____
ARTHUR D. SPATT
United States District Judge
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