Opinion
CA No. 8:04-265-20
April 8, 2004
ORDER
This matter is before the court on the government's motion to dismiss and Faith Davenport Wood's ("Wood") motion to remand. After review, the court dismisses Wood's claims with prejudice, dismisses the government, and remands Dewey Robertson's ("Robertson") counterclaims.
I. PROCEDURAL AND FACTUAL BACKGROUND
This case stems from the internal Revenue Service's ("IRS") seizure of property for Roger Davenport's ("Davenport") failure to pay federal income taxes. This quiet title action is the latest of several related actions arising from the facts and circumstances surrounding the assessment of taxes against Davenport and the subsequent sale of property to Robertson.
On July 22, 1985, Davenport and his wife, Margaret Davenport ("Margaret"), purchased lakefront property in Saluda County, South Carolina for $22,000.00 ("Saluda Property"). See Audio Invs. v. Robertson, 203 F. Supp.2d 555, 557 (D.S.C. 2002), aff'd, 67 Fed. Appx. 795 (4th Cir. 2003)(unpublished). Davenport failed to pay federal income taxes for the years 1991 through 1993. Id. at 558. On February 13, 1995, the IRS made an assessment of $33,534.00 in taxes and $3,245.04 in interest for unpaid taxes due for 1991.Id. On July 3, 1995, the IRS made an assessment of $34,111.00 in taxes and $8,020.41 in interest for taxes due in 1992. Id. On February 12, 1996, the IRS made an assessment of $11,338.00 in taxes and $2,467.03 in interest for taxes due in 1993. Id.
On March 28, 1994, Margaret purportedly deeded her interest in the Saluda Property to the couple's daughter, Wood, for "ten dollars, plus love and affection." See Audio Invs. v. Robertson, 203 F. Supp.2d 555, 558 (D.S.C. 2002), aff'd, 67 Fed. Appx. 795 (4th Cir. 2003)(unpublished). Thereafter, on June 10, 1996, Wood attempted to transfer her 50% interest in the Saluda Property to Audio Investments, designated as an irrevocable trust. Audio Invs., 203 F. Supp.2d at 557-58.
As noted by the court in Audio Invs., "[a]ssuming it exists at all, Audio Investments is a curious creature." 203 F. Supp.2d at 559. Furthermore, this court held that "[w]ithout a beneficiary or a purpose, Audio Investments is not a trust. . . ." Id. at 561.
On March 21, 1996, and April 10, 1996, the IRS filed notices of federal tax liens for tax years 1991, 1992, and 1993 against Davenport.Id. at 558. On August 26, 1996, the IRS issued notices of its intent to levy to Davenport. Id. Additionally, on October 24, 1997, the IRS issued a notice of federal tax lien against Audio Investments, as the alter ego of Davenport. Id. On March 16, 1998, the IRS seized the Saluda Property and issued notices of sale. The IRS sold the property to Robertson for $110,000.00 on May 29, 1998.Id.
This action was originally filed in state court. Wood contends the IRS failed to serve her with notice of the seizure. (Compl. ¶ 9.) Robertson answered and pled counterclaims against Wood and the government. (Answer ¶¶ 11-17.) The government timely removed pursuant to 28 U.S.C. § 1441 (a) and 1442(a)(1). On March 1, 2004, Wood moved to remand the case to state court. On March 5, 2004, the government filed a motion to dismiss and a response to the motion to remand.
Previous Litigation
1) Audio Invs. v. Robertson, 203 F. Supp.2d 555 (D.S.C. 2002), aff'd 67 Fed. Appx. 795 (4th Cir. 2003)(unpublished).
Originally filed as C.A. No. 8:00-2847 on Sept. 23, 1999.
On October 7, 1999, Audio Investments brought the first of several actions to quiet title of the Saluda Property against Robertson in state court. Robertson added the IRS as a third-party defendant, and the government removed the action to federal court. The court granted the government summary judgment on several grounds, holding the conveyance of the Saluda Property to Audio Investments was fraudulent, Audio Invs., 203 F. Supp.2d at 560, and that Audio Investments was simply the alter ego of Davenport. Id. at 561. The court also noted that both Margaret and Wood failed to bring an action within the nine-month statute of limitations period established by 26 U.S.C. § 6532(c)(1). Id. at 562. On appeal, the Court of Appeals for the Fourth Circuit affirmed. 67 Fed. Appx. at 798.
2) Davenport v. Federal Tax lien Records, (C.A. No. 3:02-183) (filed Jan. 18, 2002). On October 11, 2001, Davenport filed an action in state court against two federal liens; Paul H. O'Neal, the United States Secretary of the Treasury; Carol Blount; and William J. Johnson. The federal government was subsequently substituted as the defendant. Specifically, Davenport alleged the tax liens were fraudulently obtained, and he sought their cancellation. In an order filed June 11, 2002 ("June Order"), the court dismissed the action because the government had not waived its sovereign immunity. Additionally, and alternatively, in the June Order, this court dismissed Davenport's claims for the reasons stated in Audio Invs. Davenport did not appeal.
3) Davenport v. Robertson, 79 Fed. Appx. 575 (4th Cir. 2003)(unpublished).
Originally filed as C.A. No. 8:02-3037 on Sept. 16, 2002.
On September 16, 2002, Davenport filed a pro se petition to vacate a void judgment and remand. Specifically, Davenport sought to void the court's grant of summary judgment in the Audio Invs. case which was on appeal at the time. The court construed the motion as one made pursuant to Rule 60(b) of the Federal Rules of Civil Procedure and denied it. Davenport appealed, and on October 29, 2003, the Fourth Circuit affirmed. Id.
II. DISCUSSION OF THE LAW
Upon review of the complaint, it is apparent the issues presented arise under federal statute, and the court finds that the complaint establishes federal question jurisdiction. A claim arises under the laws of the United States when "[t]he complaint seeks a remedy expressly granted by a federal law or if it requires the construction of a federal statute or a distinctive policy of a federal statute requires the application of federal legal principles for its disposition."Crawford v. Mokhtari, 842 F. Supp. 840, 843 (D. Md. 1994) (internal citation and quotation omitted).
[I]f a court is on notice that it has previously decided the issue presented, the court may dismiss the action sua sponte, even though the defense has not been raised. This result is fully consistent with the policies underlying res judicata: it is not based solely on the defendant's interest in avoiding the burdens of twice defending a suit, but is also based on the avoidance of unnecessary judicial waste.Arizona v. California, 530 U.S. 392, 412 (2000) (internal citation and quotation omitted). See also. Holloway Constr. Co. v. United States Dep't of Labor, 891 F.2d 1211, 1212 (6th Cir. 1989) (affirming district court's sua sponte assertion of res judicata where the district court had decided the original case and adding that "a district court may invoke the doctrine of res judicata in the interests of, inter alia, the promotion of judicial economy.").
This court takes judicial notice of several prior proceedings involving the Saluda Property and its sale to Robertson. These previous actions involved the same issue of whether the IRS properly assessed, levied, and sold the Saluda Property. Specifically, in Audio Invs., the Fourth Circuit "affirm[ed] the district court's order upholding the validity of the seizure and sale of the Saluda County property." 67 Fed. Appx. at 798.
A district court may take judicial notice of a prior related proceeding. See United States v. Parker, 956 F.2d 169. 171 (8th Cir. 1992). See also Fletcher v. Bryan, 175 F.2d 716, 717 (4th Cir. 1949).
Furthermore, on appeal in Audio Invs., Audio Investments argued that the levy was improper because the seizure and sale of the Saluda Property affected the ownership of persons who were not the taxpayer subject to the lien. The Fourth Circuit disagreed citing to the exclusive remedy of third parties who seek to assert claims on property levied by the IRS, pursuant to 26 U.S.C. § 7426 (a)(1). 67 Fed. Appx. at 797. Furthermore, the court noted that, pursuant to 26 U.S.C. § 6532(c)(1), a wrongful levy must be filed within nine months of the date of the levy. Id. It is undisputed that neither Margaret nor Wood brought an action within the nine-month statute of limitations set out in § 6532(c)(1). Wood contends in this action that she never received notice (Pl.'s Mem. Supp. Mot. Remand at 2) and additionally that, until the Audio Investment case became final on appeal, she did not know that Robertson "might make any claim of title to the 50%" of the Saluda Property which her mother deeded to her. (Compl ¶ 14.) These arguments are completely meritless. The entire parcel of land was transferred to Robertson, and it was Davenport who subsequently brought an action raising title issues. Robertson did not need to bring any action claiming title in Wood's alleged 50% interest. He has title to 100% of the property. Furthermore, the Fourth Circuit has held that the procedure by which Robertson obtained title was valid. 67 Fed. Appx. at 798. Wood is attempting to raise the same issues previously decided in other proceedings by the court and affirmed on appeal. Accordingly, Wood's claims are barred and should be dismissed.
Additionally, the government's motion to be dismissed as a third-party defendant on the ground it has not waived its sovereign immunity should also be granted. "As sovereign, the United States enjoys immunity from suits for damages at common law." Perkins v. United States, 55 F.3d 910, 913 (4th Cir. 1995). Robertson has failed to allege any basis for waiving sovereign immunity. While 28 U.S.C. § 2410 provides a limited waiver of sovereign immunity to quiet title to real or personal property, Robertson is not seeking to quiet title. Robertson is requesting that the government evict Davenport and his family from the Saluda Property or refund the amount Robertson paid for the Saluda Property plus interest. (Answer ¶¶ 15-17.) There is no waiver of sovereign immunity related to such claims. Therefore, the United States should be dismissed as a third-party defendant.
It is therefore
ORDERED that Wood's claims are dismissed with prejudice. It is further
ORDERED that the government's motion to dismiss is granted. It is further
ORDERED that Robertson's counterclaims against Wood be remanded to state court. The court instructs the Clerk of Court to remand the counterclaims in this case to the Court of Common Pleas for the State of South Carolina. It is further
ORDERED that Wood's motion to remand is dismissed as moot.