Hattrup v. United States ( 2021 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT February 3, 2021
_________________________________
Christopher M. Wolpert
Clerk of Court
SCOTT GREGORY HATTRUP,
Plaintiff - Appellant,
v. No. 20-3011
(D.C. No. 5:17-CV-04083-DDC)
UNITED STATES OF AMERICA; JULIA (D. Kan.)
DENG, a/k/a Julia D. Palmer,
Defendants - Appellees.
_________________________________
ORDER AND JUDGMENT *
_________________________________
Before LUCERO, BACHARACH, and PHILLIPS, Circuit Judges.
_________________________________
Scott Gregory Hattrup appeals from the judgment entered following the district
court’s dismissal all claims against the United States and its grant of summary
judgment in favor of Julia Deng. Exercising jurisdiction pursuant to 28 U.S.C.
§ 1291, we affirm.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
I. Background
Hattrup had several years of unpaid federal income tax liabilities. In a
previous action, the United States obtained district court approval for a judicial levy
on property that Hattrup owned in Johnson County, Kansas (the “Property”), to
collect on those liabilities.
In April 2016, the Internal Revenue Service (“IRS”) provided Hattrup with a
notice of seizure of the Property. In August of that year, the IRS provided him with a
notice of sale by public auction (“Notice of Sale”). The Notice of Sale listed
October 6, 2016, as the scheduled public auction date. It also identified the IRS’s
Property Appraisal & Liquidation Specialist (“PALS”) for the scheduled sale and
included a telephone number and address “for information about the sale.” R. at 110.
The Notice of Sale set forth Hattrup’s statutory redemption rights both before and
after the sale. As to the latter, the Notice of Sale stated that Hattrup’s right of
redemption would run for 180 days after the sale and that the redemption price would
be the amount paid at the sale plus interest at 20% per annum.
The public auction sale of the Property took place, as scheduled, on October 6,
2016. Hattrup did not attend the sale. Deng was the high bidder for the Property.
She paid the purchase price the same day and received from the PALS a certificate of
sale and a letter indicating the sale would be finalized after expiration of the 180-day
redemption period if the Property was not redeemed by that time.
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The IRS provided no further notice regarding the sale of the Property to
Hattrup. He did not communicate with the PALS or any other IRS employee
regarding the Property or the sale during the redemption period.
In early May 2017, after the redemption period had expired, Deng surrendered
the certificate of sale in exchange for a quitclaim deed. Deng recorded the quitclaim
deed in Johnson County, Kansas, on May 15, 2017. She hand delivered to Hattrup a
notice to quit the premises on May 17, 2017. Hattrup learned of the sale of the
Property at that time. When he did not vacate the Property, Deng filed an eviction
action in state court and received a judgment for possession in July 2017.
Hattrup filed this pro se action against the United States and Deng in
September 2017. While conceding he had received the Notice of Sale, he alleged that
the United States violated his right to due process under the Fifth and Fourteenth
Amendments by failing to provide him an additional notice after the sale of the
Property. Hattrup contended that the Notice of Sale was constitutionally insufficient
because it did not include all of the information—specifically, the name and address
of the purchaser and the purchase price—that was necessary for him to exercise his
post-sale right to redeem. Hattrup sought (1) to enjoin enforcement of the quitclaim
deed, (2) additional time to redeem the Property, and (3) to quiet title to the Property
in his favor if he did redeem. Alternatively, he sought damages from the United
States.
3
The district court granted the United States’ motion to dismiss all of the claims
against the government. As relevant to Hattrup’s contentions on appeal, 1 the court
held that the statutory waiver of sovereign immunity pursuant to 28 U.S.C. § 2410did not apply in Hattrup’s case. The district court also granted summary judgment in
favor of Deng, concluding that the Notice of Sale provided Hattrup constitutionally
sufficient notice.
II. Discussion
On appeal, Hattrup argues the district court erred in holding the waiver of
sovereign immunity in § 2410 was inapplicable in his case. Alternatively, he
contends that a waiver of sovereign immunity is implied in tax sale cases. Hattrup
further argues that the Notice of Sale was insufficient to satisfy due process with
respect to his post-sale right to redeem.
We review de novo both the district court’s dismissal of Hattrup’s claims
against the United States, see Jones v. Needham, 856 F.3d 1284, 1289 (10th Cir.
2017), and its grant of summary judgment in favor of Deng, see Utah Republican
Party v. Cox, 892 F.3d 1066, 1076 (10th Cir. 2018). We liberally construe Hattrup’s
pro se arguments on appeal. See Cummings v. Evans, 161 F.3d 610, 613 (10th Cir.
1998). 2
1
Hattrup does not challenge on appeal several of the district court’s bases for
dismissing his claims against the United States.
2
Hattrup was formerly a licensed attorney in Kansas. Although liberal
construction does not apply to an attorney proceeding pro se, see Smith v. Plati,
4
A. Dismissal of Claims Against the United States for Lack of
Jurisdiction
The United States cannot be sued except in strict accordance with the terms of
a specific waiver of sovereign immunity granted by Congress. See Lane v. Pena,
518 U.S. 187, 192 (1996) (holding that any waiver of “sovereign immunity must be
unequivocally expressed in statutory text” and “will be strictly construed, in terms of
its scope, in favor of the sovereign”). “The defense of sovereign immunity is
jurisdictional in nature, depriving courts of subject-matter jurisdiction where
applicable.” Normandy Apartments, Ltd. v. U.S. Dep’t of Hous. & Urb. Dev.,
554 F.3d 1290, 1295 (10th Cir. 2009).
Hattrup argues the United States waived sovereign immunity pursuant to
§ 2410, which provides, in relevant part:
Under the conditions prescribed in this section . . . 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 . . . to quiet title to . . . real or personal property on
which the United States has or claims a mortgage or other lien.
28 U.S.C. § 2410(a)(1) (emphasis added). “Section 2410(a) expressly authorizes
quiet title actions affecting property on which the United States has a lien only
‘[u]nder the conditions prescribed in this section,’” including the pleading
requirements in § 2410(b). Dahn v. United States, 127 F.3d 1249, 1251 (10th Cir.
1997) (quoting § 2410(a)). The district court held that § 2410 did not provide a
waiver of sovereign immunity in this action for two reasons: (1) the United States
258 F.3d 1167, 1174 (10th Cir. 2001), the district court noted that Hattrup’s license is
inactive, see R. at 69 n.1.
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did not have or claim a lien on the Property at the time Hattrup filed this action
because its tax lien on the Property was extinguished upon the completion of the sale
to Deng, and (2) Hattrup’s complaint failed to comply with the mandatory technical
pleading requirements of § 2410(b). Hattrup fails to demonstrate error in either of
these rulings, but to affirm the dismissal of his claims against the United States we
need only address the district court’s first reason.
The waiver of sovereign immunity in § 2410 “must be narrowly construed.”
Lonsdale v. United States, 919 F.2d 1440, 1443 (10th Cir. 1990). In Dahn, 127 F.3d
at 1251 (10th Cir. 1997), we affirmed a district court’s denial of leave to amend the
plaintiff’s complaint to invoke the waiver of sovereign immunity in § 2410. In
addition to the plaintiff’s failure to satisfy the pleading requirements in § 2410(b),
see id., we noted that her proposed amended complaint did not object to an existing
lien interest by the United States, but instead challenged collection efforts that had
already resulted in the sale of her property, see id. at 1251 n.1. We held that “[a]
quiet title claim [under § 2410], first made when any liens involved no longer
existed, was barred ab initio.” Id.; see also Koehler v. United States, 153 F.3d 263,
266-67 (5th Cir. 1998) (holding based on “the plain terms of the statute” that a
“taxpayer may maintain a suit 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”); Hughes v. United States, 953 F.2d 531, 538 (9th Cir.
1992) (“[W]hile a taxpayer may contest the procedural validity of a tax lien under
§ 2410, he may do so only if, at the time the action is commenced, the government
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still claims a lien or a mortgage on the property. If the government has sold the
property prior to the filing of the suit, and no longer claims any interest in the
property, § 2410 does not apply.”). Thus, the district court did not err in holding it
lacked jurisdiction over Hattrup’s claims against the United States because the
government neither had nor claimed a lien interest in the Property at the time he filed
this action, as required for a waiver of sovereign immunity under § 2410. 3
Hattrup nonetheless asserts that he should be able to pursue his claims against
the United States under an implied waiver of sovereign immunity that he maintains is
applicable in tax sale cases. But it is well settled that a waiver of sovereign
3
Hattrup argues that other courts have held otherwise, but we are bound by the
decision in Dahn, including its reasoning underlying the holding that the plaintiff’s
proposed amended complaint failed to invoke the waiver of sovereign immunity in
§ 2410. See United States v. Meyers, 200 F.3d 715, 720 (10th Cir. 2000) (“The
precedent of prior panels which this court must follow includes not only the very
narrow holdings of those prior cases, but also the reasoning underlying those
holdings, particularly when such reasoning articulates a point of law.”). Nor does
Hattrup even attempt to distinguish our holding in Dahn. See id. (rejecting a party’s
attempt to distinguish this court’s prior case law).
7
immunity “cannot be implied but must be unequivocally expressed.” United States v.
Testan, 424 U.S. 392, 399-400 (1976) (internal quotation marks omitted).
We affirm the district court’s dismissal of Hattrup’s claims against the United
States for lack of jurisdiction because the government did not waive sovereign
immunity.
B. Summary Judgment in Favor of Deng
In granting summary judgment in favor of Deng, the district court held that the
notice the IRS provided to Hattrup satisfied due process. The Internal Revenue Code
requires that, after a seizure of property, a notice of sale must be provided to the
property owner “specify[ing] the property to be sold, and the time, place, manner,
and conditions of the sale thereof.” 26 U.S.C. § 6335(b). Hattrup conceded that he
received the Notice of Sale pursuant to § 6335(b). Although not required by statute,
the Notice of Sale also informed Hattrup of his post-sale redemption rights pursuant
to 26 U.S.C. § 6337(b) by quoting that section verbatim. See R. at 111. Hattrup
contended this notice of his redemption rights did not satisfy due process because it
was provided before the sale of the Property and did not include enough
information—specifically, the name and address of the purchaser and the purchase
price—to allow him to redeem the Property after the sale.
“Procedural due process imposes constraints on governmental decisions which
deprive individuals of ‘liberty’ or ‘property’ interests within the meaning of the
Due Process Clause of the Fifth or Fourteenth Amendment.” Mathews v. Eldridge,
424 U.S. 319, 332 (1976). But “due process, unlike some legal rules, is not a
8
technical conception with a fixed content unrelated to time, place and
circumstances.” Id. at 334 (brackets and internal quotation marks omitted). Rather,
“due process is flexible and calls for such procedural protections as the particular
situation demands.” Id. (alteration and internal quotation marks omitted). Moreover,
“the Due Process Clause has never been construed to require that the procedures used
to guard against an erroneous deprivation of a protectible ‘property’ or ‘liberty’
interest be so comprehensive as to preclude any possibility of error.” Mackey v.
Montrym, 443 U.S. 1, 13 (1979). Thus, the determination whether due process is
satisfied in a particular case “requires analysis of the governmental and private
interests that are affected.” Mathews, 424 U.S. at 334. To that end, the Supreme
Court has directed courts to consider “three distinct factors”:
First, the private interest that will be affected by the official action; second,
the risk of an erroneous deprivation of such interest through the procedures
used, and the probable value, if any, of additional or substitute procedural
safeguards; and finally, the Government’s interest, including the function
involved and the fiscal and administrative burdens that the additional or
substitute procedural requirement would entail.
Id. at 335.
More specifically, as it relates to Hattrup’s contention on appeal, due process
requires “notice [that is] reasonably calculated, under all the circumstances, to
apprise interested parties of the pendency of the action and afford them an
opportunity to present their objections.” Mullane v. Cent. Hanover Bank & Tr. Co.,
339 U.S. 306, 314 (1950); see also Mennonite Bd. of Missions v. Adams, 462 U.S.
791, 798 (1983) (holding a mortgagee was “entitled to notice reasonably calculated to
9
apprise him of a pending tax sale”). Consequently, once “one is informed that the
matter is pending,” he “can choose for himself whether to appear or default,
acquiesce or contest.” Mullane, 339 U.S. at 314.
Considering the Mathews factors, the district court first held that the right of
redemption is a significant property interest that is entitled to due process protection.
Thus, the court concluded that the first factor favored Hattrup.
The court next considered the risk of an erroneous deprivation of Hattrup’s
property interest due to the notice the IRS provided. It noted that he received notice
of his statutory post-sale redemption rights in advance of the sale, as well as the date
and location of the sale and the PALS’ contact information to answer any questions
he had regarding the sale. Yet he neither attended the sale nor contacted the PALS to
inquire whether the Property had been sold. The district court held that “due process
does not require notice of every detail about every incremental step of the foreclosure
process. Instead, it requires notice ‘reasonably calculated, under all the
circumstances, to apprise interested parties of the pendency of the action and afford
them an opportunity to present their objections.’” R. at 234 (quoting Mullane,
339 U.S. at 314). The court concluded that the Notice of Sale—which was delivered
to Hattrup before the 180-day right to redeem began—“was reasonably calculated
under all the circumstances to apprise plaintiff both of the pending sale and
commencement of his time-limited, post-sale redemptions rights.” Id. at 235.
Further, his choice “not to determine the status of the sale does not mean that the
pre-sale [Notice of Sale] did not comport with due process.” Id. at 236.
10
The district court next considered “the probable value of additional
safeguards.” Id. at 238. It concluded that a second, post-sale notice would not
materially reduce the risk that Hattrup would be erroneously deprived of his
redemption rights because he had already been notified that those rights were at risk
and were expected to expire 180 days after the sale, and because the Notice of Sale
provided enough information for Hattrup to take steps to redeem if he so chose. The
court held that “[t]he value of an additional post-sale notice confirming the sale
results does not nullify the conclusion that the initial notice informed plaintiff of his
redemption rights. It was reasonably calculated to provide constitutionally adequate
notice under the circumstances.” Id. at 240. Thus, the court held that the second
Mathews factor heavily favored the United States because the risk of erroneous
deprivation was low where Hattrup received actual notice of the sale and his
redemption rights but “simply failed to take any steps to preserve his rights.” Id.
Finally, the district court briefly considered the third Mathews factor—the
burden on the government of requiring a second, post-sale notice—and concluded it
did not favor Hattrup. Having already found that the Notice of Sale satisfied
constitutional due process requirements as to Hattrup’s redemption interest, the court
held that providing notice of his redemption rights in the Notice of Sale “conserves
taxpayer resources and minimizes administrative burden by providing actual notice of
the sale and the redemption rights together.” Id. at 243.
Thus, after considering all of the Mathews factors, the district court held that
Hattrup did not have a constitutional right to post-sale notice of his redemption rights
11
under the circumstances presented. It therefore granted summary judgment in favor
of Deng on Hattrup’s claims stemming from the alleged due process violation.
Hattrup argues that all three Mathews factors weigh in favor of requiring the
government to provide an additional, post-sale notice providing the name and address
of the purchaser and purchase price. He contends that due process requires such
notice at a bare minimum, but he cites no authority for this proposition. 4 Hattrup
also argues that the Notice of Sale was insufficient because it failed to state how he
could obtain the information necessary for him to redeem after the sale. On the
contrary, the Notice of Sale provided him two avenues to obtain that information: by
attending the sale or by contacting the PALS. Hattrup contends the Notice of Sale
improperly shifted to him the burden of obtaining that post-sale information. But due
process requires only notice of the pending proceeding and an opportunity to act in
response. And Hattrup received such notice via the Notice of Sale. Finally, Hattrup
argues that a post-sale notice “could easily be prepared by the IRS staff while
working on the other [post-sale] documents required.” Aplt. Br. at 16-17. But he
ignores the district court’s other bases for concluding that the final Mathews factor
weighed against him.
In sum, Hattrup received notice that the sale of the Property was pending. He
chose not to attend the sale or otherwise exercise the opportunity to act in response to
4
Although Hattrup cites one case in which taxpayers received a post-sale
notice of redemption rights, he provides no authority holding that such notice is
constitutionally required.
12
that notice. See Mullane, 339 U.S. at 314 (noting that, once informed, a person “can
choose for himself whether to appear or default”). Hattrup fails to demonstrate error
in the district court’s holding that the Notice of Sale was sufficient to satisfy his right
to due process. We therefore affirm the district court’s grant of summary judgment
in favor of Deng.
III. Conclusion
The district court’s judgment is affirmed.
Entered for the Court
Gregory A. Phillips
Circuit Judge
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