Koehler v. USA

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT
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No. 97-50939
Summary Calendar
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PATRICIA RAE KOEHLER,

Plaintiff-Appellant,

versus

UNITED STATES OF AMERICA, Internal
Revenue Service (IRS Agent M.A.
Alcorta); JOHN F. MOORING;
RONALD R. RIVAS,

Defendants-Appellees.

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Appeal from the United States District Court for the
Western District of Texas
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September 16, 1998
Before EMILIO M. GARZA, DeMOSS, and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:

The appellant, Patricia Rae Koehler, appeals from the district

court’s dismissal of her claims against the United States on the

grounds that the United States was entitled to sovereign immunity.

For the reasons set forth below, we AFFIRM.

Background

In the early 1990s, the Internal Revenue Service (“IRS”)

determined that Koehler (hereinafter “taxpayer”) owed federal

income taxes for the years ending December 31, 1988, and December
31, 1989, in the amounts of $7165.35 and $6914.84, respectively.

On December 11, 1995, in order to satisfy her tax liabilities, the

IRS seized taxpayer’s real property and posted a Notice of Seizure

at taxpayer’s residence. The IRS did not, however, give taxpayer

a Notice of Sale at the time of the seizure. Instead, the IRS

mailed taxpayer a Notice of Sale on January 4, 1996. It is

undisputed that taxpayer had actual notice of the proposed sale

well before the actual sale of the property. In fact, prior to the

sale of the property, taxpayer posted a notice at her residence,

entitled:

Public Notice
ATTENTION POTENTIAL BIDDERS
IRS PUBLIC AUCTION SALE

The notice then listed “Facts you should know,” which consisted of

taxpayer’s objections to the validity of the seizure and proposed

sale. Taxpayer concluded the notice with a warning: “Be advised

that the buyers of said property will be involved in ongoing civil

litigation, probably lose the property investment, and be included

in criminal complaints - Federal and Bandera County.” Those

desiring “more information” were invited to call the taxpayer at

home, and a phone number was provided.

On January 30, 1996, the IRS sold taxpayer’s property at a

public auction to defendants John F. Mooring and Ronald R. Rivas

for $21,955.41. Pursuant to I.R.C. § 6338(a), a certificate of

sale was issued to the buyers on that same date. Taxpayer’s right

of redemption under I.R.C. § 6337 expired on July 29, 1996. See

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I.R.C. § 6337(b)(1) (allowing an owner 180 days from the date of

sale to redeem real property). It is undisputed that taxpayer did

not attempt to redeem the property. Pursuant to I.R.C. § 6338(b),

a quitclaim deed was issued to the buyers on August 15, 1996.

On September 19, 1996, taxpayer filed the instant complaint to

quiet title, alleging that the United States had not complied with

the notice requirements of I.R.C. § 6335 in that the IRS had failed

to give her proper notice of the sale. Specifically, taxpayer

claimed that the IRS failed to give the required notice of the sale

to her or to deliver the notice to her “usual place of abode or

business” as required by I.R.C. §§ 6335(a) and (b). On October 18,

1995, taxpayer’s motions for a temporary restraining order,

preliminary injunction, and permanent injunction were denied by the

district court. On that same date, the United States then filed a

motion to dismiss or for summary judgment on the grounds that it

was entitled to sovereign immunity. Although the government

acknowledged that the IRS had failed to give taxpayer a Notice of

Sale in accordance with the requirements of I.R.C. § 6335(b), the

government asserted that, because it had sold the property in

question prior to the filing of the complaint, the government had

not waived its sovereign immunity, and the complaint should be

dismissed for lack of subject matter jurisdiction. In the

alternative, the government argued that taxpayer was not entitled

to equitable relief because she had actual notice of the sale

before it occurred and that she failed to commence this action in

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a timely manner.

On September 15, 1997, the district court granted the

government’s motion to dismiss, finding that the taxpayer could

“only maintain a cause of action against the United States to quiet

title when the United States has a claim on the property in

question. In this case, the United States has already transferred

title to Defendants Mooring and Rivas, and, therefore, this Court

is without jurisdiction to hear her claims.” A judgment of

dismissal was entered that same day.1 On September 26, 1997,

taxpayer filed a motion for reconsideration, which the district

court denied by order dated November 9, 1997.

Taxpayer now appeals the district court’s order granting the

government’s motion to dismiss for lack of subject matter

jurisdiction and the order denying her motion for reconsideration.

Standard of Review

Whether the United States is entitled to sovereign immunity is

a question of law which this court reviews de novo. Cf. Stena

Rederi AB v. Comision de Contratos, 923 F.2d 380, 386 (5th

1
Although the district court entered a judgment on September 15, 1997,
the court still had a case pending before it because of taxpayer’s claims against
defendants Rivas and Mooring. Thus, there is some question as to whether the
district court properly entered judgment on September 15, 1997, and consequently
whether plaintiff’s notice of appeal was premature. We need not address any of
the issues raised by these events, however, because any problems with our
jurisdiction resulting from a premature notice of appeal were cured when the
district court entered an order dismissing plaintiff’s claims against defendants
Rivas and Mooring and remanded the action to the County Court of Bandera County,
Texas. See Jetco Elec. Indus., Inc. v. Gardiner, 473 F.2d 1228, 1231 (5th Cir.
1973). Taxpayer has not appealed the district court’s dismissal of her claims
against Rivas and Mooring.

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Cir.1991).

Discussion

It is well settled that the United States may not be sued

except to the extent that it has consented to suit by statute. See

United States v. Dalm, 494 U.S. 596, 608 (1990). The terms of such

consent, if any, may not be implied but must be unequivocally

expressed. See United States v. King, 395 U.S. 1, 4 (1969).

Consequently, no suit may be maintained against the United States

unless the suit is brought in exact compliance with the terms of a

statute under which the sovereign has consented to be sued.

See Soriano v. United States, 352 U.S. 270, 276 (1957). Where the

United States has not consented to suit or the plaintiff has not

met the terms of the statute, the court lacks jurisdiction and the

action must be dismissed. See Fed. R. Civ. P. 12(h)(3); Dalm, 494

U.S. at 608.

Taxpayer asserts that the United States has waived its

sovereign immunity by virtue of 28 U.S.C. § 2410(a).2 Section

2410(a) provides, in relevant part:

The United States may be named as a party in any civil action
or suit in district court . . . having jurisdiction of the
subject matter to quiet title to . . . real or personal
property on which the United States has or claims a mortgage
or other lien.

2
Taxpayer also maintains that this court has jurisdiction over her claims
by virtue of 28 U.S.C. 1331. It is well settled, however, that sovereign
immunity is not waived by a general jurisdictional statute such as 28 U.S.C. §
1331. See Voluntary Purchasing Groups, Inc. v. Reilly, 889 F.2d 1380 (5th Cir.
1989).

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28 U.S.C. § 2410(a). Although the government does not challenge

the ability of a taxpayer to contest the procedural validity of a

tax lien under § 2410(a),3 the government argues that § 2410(a) is

inapplicable in this case because the government had already sold

the property in question by the time taxpayer filed her quiet title

action. Thus, the government argues, it did not have a mortgage or

other lien on taxpayer’s property at the time she filed suit.

Consequently, the government argues, the plain terms of § 2410(a)

were not met, and there was no waiver of sovereign immunity.

Although this court has not addressed this particular issue,4

each of the courts that have addressed it has uniformly concluded

that a taxpayer may maintain an action under § 2410(a) “only if, at

the time the [§ 2410(a)] action is commenced, the government still

claims a lien or a mortgage on the property. If the government has

sold the property prior to the filing of the [§ 2410(a)] suit, . .

. § 2410(a) does not apply.” Hughes v. United States, 953 F.2d

531, 538 (9th Cir. 1991); accord Dahn v. United States, 127 F.3d

1249, 1251-52 n.1 (10th Cir. 1997) (citing Hughes); Murray v.

3
The courts have consistently interpreted § 2410(a) to create a waiver
of the government’s immunity only in cases in which a taxpayer seeks to challenge
the procedural validity of a tax lien that the government has or claims on the
property that is the subject of the quiet title action. A taxpayer may not use
§ 2410(a) to challenge the validity of the underlying tax assessment. See
Montgomery v, United States, 933 F.2d 348, 349 (5th Cir. 1991).
4
We have, however, consistent with the rules underlying all sovereign
immunity inquiries, construed § 2410(a) narrowly. For example, in Cummings v.
United States, we held that § 2410(a) does not apply where the United States
claims only a title interest in the property rather than a lien interest. 648
F.2d 289, 292 (5th Cir. 1981); accord United Sand & Gravel Contractors, Inc. v.
United States, 624 F.2d 733, 737 (5th Cir. 1980); Bertie’s Apple Valley Farms v.
United States, 476 F.2d 291, 292 (9th Cir. 1973).

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United States, 520 F. Supp. 1207, 1210 (D.N.D. 1981), aff’d on

other grounds, 686 F.2d 1320 (8th Cir. 1982); MacElvain v. United

States, 867 F. Supp. 996, 1002-03 (M.D. Ala. 1991); Brewer v.

United States, 764 F. Supp. 309, 314 (S.D.N.Y. 1991). See also

Kulawy v. United States, 917 F.2d 729, 733-34 (2d Cir. 1990)

(finding that the district court had jurisdiction over a § 2410(a)

quiet title action even though the government had sold the property

because the government still had a lien on the property at the time

the § 2410(a) suit was commenced). Because we conclude that this

interpretation is dictated by the plain terms of the statute,5 we

now join these courts in holding that taxpayer may maintain a suit

5
This limitation also has a practical justification:

The most persuasive reason for this limitation is in the very nature of a
quiet-title action. The purpose of a quiet-title action is "to determine
who owns the title to real or personal property over which the United
States has asserted some interest," Smith v. United States, 1989 WL 91136
at *4 (M.D.Ala. June 19, 1989) (Thompson, J.), and implicit in this
purpose is the requirement that the defendant--in this case the United
States-- have, at the time of the initiation of the lawsuit, an interest
adverse to that of the plaintiff. Indeed, consistent with this purpose,
§ 2410(a) requires that "The complaint or pleading shall set forth with
particularity the nature of the interest or lien of the United States."
Moreover, this reading of § 2410(a) is consistent with the understanding
that has devolved from its ancient underpinnings. State courts have held
that in order to maintain quiet- title actions, which have their roots in
courts of chancery from the earliest times, there must be a showing that
the defendant asserts a claim or interest that is adverse to the
plaintiff's. See, e.g., Sadler v. Home Savings, 733 S.W.2d 856 (Mo.App.
1987) (once bank had assigned deed of trust it no longer had interest in
property and was properly dismissed from quiet-title action); Lake Garda
Improvement Association v. Battistone, 155 Conn. 287, 231 A.2d 276 (1967)
(an action to quiet title is quasi in rem and lies against those who at
time it is instituted are present claimants to land under an instrument
that creates cloud); 74 C.J.S. Quieting Title S 37 ("In order to maintain
the statutory action to determine adverse claims to realty, there must be
a showing that defendant asserts a claim which is adverse to plaintiff's
title or possession.") (1951).

McElvain, 867 F. Supp. at 1002-03.

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under § 2410(a) only if at the time she files suit the government

had a mortgage or other lien on the property that is the basis of

the taxpayer’s quiet title action.

In this case, there is no dispute that the property at issue

was sold by the United States prior to taxpayer’s filing of her

complaint. Recognizing this, taxpayer argues that, because the

government failed to comply with the notice requirements of I.R.C.

§ 6335(b), the quitclaim deed issued to defendants Mooring and

Rivas was ineffective to convey title, and therefore the government

still retains a lien interest in the property. Consequently,

taxpayer argues, pursuant to § 2410(a), the government has waived

its sovereign immunity, and the district court had jurisdiction

over her suit pursuant to § 2410(a).6

Although facially appealing, this argument misses the effect

of sovereign immunity. At its core, sovereign immunity deprives

the courts of jurisdiction irrespective of the merits of the

underlying claim. If the specific terms of the statute are not

met, the federal courts have no jurisdiction to address the merits

of the plaintiff’s claim. Were we to accept taxpayer’s argument,

6
Taxpayer suggests that this court has already adopted this reasoning in
Reece v. Scoggins, 506 F.2d 967, 971 (5th Cir.1975). Although Reece affirmed a
district court opinion voiding the government’s sale of a taxpayer’s property for
failing to comply with the procedural requirements of § 6335, we find that Reece
is not controlling for the simple reason that the court did not address the issue
of whether the United States needed to have a lien on the property at the time
the suit was filed in order for § 2410(a) to waive the government’s sovereign
immunity. The failure of the court to address this issue is easily explained --
as the Reece court itself noted, the IRS was not a party to the appeal. See id.
at 968 (“The IRS, a named defendant before the district court, has subsequently
withdrawn from the case.”).

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we would first have to find for her on the merits and then reason

backwards to find a waiver of sovereign immunity. Because

sovereign immunity is jurisdictional and, therefore, deprives this

court of the ability to hear the merits of the claim altogether,

such reasoning is inherently flawed. In the end, because the plain

and unambiguous terms of § 2410(a) have not been met -- i.e., the

government no longer claims an interest in the property -- §

2410(a) does not confer subject matter jurisdiction irrespective of

how meritorious taxpayer’s claims may be.7

Conclusion

For the reasons set forth above, the judgment of the district

court dismissing taxpayer’s claims against the United States on the

basis of sovereign immunity is AFFIRMED.

7
We recognize that under circumstances more egregious than those
presented here, this conclusion might produce some harsh results. As noted
above, however, in this case, taxpayer had actual notice of the sale prior to the
sale itself and took no steps either to enjoin the sale of the property or, after
the sale was complete, to redeem her property under I.R.C. § 6337. Under such
circumstances, we fail to see any inequities. Moreover, we note that taxpayer
may still maintain her action against defendants Mooring and Rivas in state
court. If she is successful in that action and the state court voids the sale
of the property, the United States may then once again have a lien on the
property. At that time, taxpayer may bring whatever actions she may have, if
any, under § 2410.

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