Opinion
7778-2007.
Decided November 13, 2007.
ORDERED that the motion of the Plaintiff Greenpoint Savings Bank for a judgment foreclosing a right of redemption as against the United States is denied with leave to renew in accordance with this decision.
STEVEN J. BAUM, P.C., Attorney for Plaintiff, Buffalo, New York.
A judgment of foreclosure and sale was entered in the Suffolk County Clerk's office on July 10, 2006 in a foreclosure action affecting the property involved in this action for strict foreclosure on or about April 14, 2005(Index No. 8999/2005). The United States of America was not named as a party in that 2005 foreclosure action as a result of an error of the company that performed the foreclosure search to determine necessary parties. Therefore the lien of the IRS remains a cloud on the title of the property. It is unclear from these papers if Greenpoint Mortgage Funding, Inc. (hereinafter "Greenpoint") presently holds title to the property and therefore, the Court cannot determine if Greenpoint is the proper party to commence this action for strict foreclosure of the property. This, however, is not the only issue that requires denial of the relief requested by the Plaintiff.
This year, Greenpoint commenced an action in strict foreclosure against the only Defendant herein, the United States of America acting through IRS, seeking a judgment barring and foreclosing the United States from enforcing its Internal Revenue Service lien on the property. According to the Plaintiff, the United States defaulted in appearing in this action and this entitles it to an ex parte judgment. However, the Court must determine if it has jurisdiction of the Defendant.
It is well-settled that, under the doctrine of sovereign immunity, the United States cannot be sued without its consent(see, Hudson County Board of Chosen Freeholders v. Morales [78-2 USTC P 9634], 581 F. 2d 379, 382, 3rd Cir. 1979). Unless there has been a waiver of sovereign immunity, the action against the United States may not go forward (see, Kroll v. Franklin Nat. Bank , 1983 WL 1644, 52 A.F.T.R.2d 83-5737, 83-2 USTC P 9562, S.D.Ohio Jun 02, 1983)
Unless the United States government consents to be sued in an action to discharge a tax lien, sovereign immunity is a bar to any action commenced against it in the Courts of the United States (see, United States v. Shaw , 309 U. S. 495, 500-505). The limitations and conditions imposed by Congress in waiving immunity must be strictly observed by the Courts and no exceptions will be implied in determining if there has been a waiver of immunity (see, Soriano v. United States , 352 U. S. 270, 77 S. Ct. 269, 1 L. Ed. 2d 306; United States v. Sherwood , 312 U. S. 584, 61 S. Ct. 767, 85 L. Ed. 1058). If there is no express, statutory waiver of immunity, this Court lacks jurisdiction to entertain an action brought against the United States (see, United States v. Sherwood , supra; Minnesota v. United States , 305 U. S. 382, 59 S. Ct. 292, 83 L. Ed. 235).
The Plaintiff has not addressed this issue in its papers. A review of the applicable statutes leads this Court to the conclusion that the applicable statutory waiver of sovereign immunity in this case is 28 U. S. C. § 2410(a). This section of the United States Code provides:
(a) Under the conditions prescribed in this section and section 1444 of this title for the protection of the United States, the United States may be named a party in any civil action or suit in any district court, or in any State court having jurisdiction of the subject matter — (1) to quiet title to, (2) to foreclose a mortgage or other lien upon, (3) to partition, (4) to condemn, or (5) of interpleader or in the nature of interpleader with respect to real or personal property on which the United States has or claims a mortgage or other lien.( USCA 2410 )
In Falik v. United States [ (65-1 USTC P 9295], 343 F. 2d 38, 42, 2d Cir. 1965, Friendly, J.), Judge Friendly analyzed USCA 2410(a) as follows:
[T]he prime purpose of § 2410(a) as enacted in 1931 . . . was to permit joinder when the lien of the United States was junior to that being foreclosed; in such cases the validity of the Government lien would generally be irrelevant. When the suit was brought by a junior lienor, the statute concededly permitted inquiry into the validity of the lien itself, as distinct from the underlying assessment, through attacks on procedural irregularity . . . on liens filed against property of a person other than the one against whom the tax had been assessed, on Government liens asserted to be prior but contended not to be, and on liens which had in fact been eliminated but not discharged of record. . . .( Falik v. United States , supra, 343 F. 2d at 41-42).
The Court further notes it may be proper to commence this suit in Federal District Court pursuant to 28 USCA § 1340. That statute, which gives the District Court "original jurisdiction of any civil action arising under any Act of Congress providing for internal revenue," has been held to apply to suits properly brought pursuant to 28 USCA § 2410.
In First Nat. Bank of East Islip v. Crest Affiliates, Inc ., ( 1974 WL 593, 34 A.F.T.R.2d 74-5300, 74-2 USTC P 9508, E.D.NY Jun 04, 1974), United States District Court Judge Travia stated:
Title 28 U. S. C. § 2410(a) was not intended to permit a taxpayer to question the merits of an assessment or to enjoin the enforcement of a tax lien. See Broadwell v. United States [64-2 USTC P 9768], 234 F. Supp. 17 (E. D. N. C. 1964), aff'd [65-1 USTC P 9310] 343 F. 2d 470 (4th Cir. 1965); Falik v. United States [65-1 USTC P 9295], 343 F. 2d 38 (2nd Cir. 1965); Seff v. Machiz [65-2 USTC P 9691], 246 F. Supp. 823 (D. Md. 1965). In such a situation, the old adage of "pay first and litigate later" still applies. Flora v. United States [60-1 USTC P 9347], 362 U. S. 145 (1960). However, where a nondelinquent taxpayer, not a party to the tax claim, asserts that a tax lien has been improperly imposed upon his real property, he may test the validity of the lien in a state court having jurisdiction of one of the five real estate actions enumerated in § 2410(a). Cf. Pipola v. Chicco [60-1 USTC P 15,276], 274 F. 2d 909, 914 (2nd Cir. 1960); see also Petition of Sills [53-2 USTC P 9581], 115 F. Supp. 239 (E. D. NY 1953).
In Integrity Trust Co. v. United States , (D.C.N.J. 1933, 3 F.Supp. 577), it was held that consent to be sued in a strict foreclosure proceeding had not been given by the United States, since the United States Code sections waiving sovereign immunity contemplated a judicial sale (see also, Borough of Kenilworth v. Corwine , 96 F.Supp. 68-citing Integrity Trust Co. v. United States with approval; Federal Procedure, Lawyers Edition , § 48:1465, Foreclosure action culminating in judicial sale, 2007; Am. Jur. 2d Federal Tax Enforcement § 1086, Foreclosure action culminating in judicial sale, 2007). In the two treatises cited above, Federal Procedure, Lawyers Edition and Am. Jur. 2d Federal Tax Enforcement , it is stated unequivocally that the United States has not waived sovereign immunity in strict foreclosure actions.
Under these conditions, unless the Plaintiff shows the Court authority permitting the relief sought herein, the Court cannot grant the relief requested by the Plaintiff, Greenpoint Mortgage Funding, Inc., in its action for strict foreclosure.