United States v. Bryan ( 2024 )

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 FOR THE EASTERN DISTRICT OF CALIFORNIA 9 10 UNITED STATES OF AMERICA, No. 2:22-cv-01962-DJC-AC 11 Plaintiff, 12 v. ORDER 13 MARK LINN BRYAN et al., 14 Defendants. 15 16 Pending before the Court is Plaintiff United States of America’s Motion to 17 Dismiss Defendant Mark Linn Bryan’s Counterclaims (“Motion”). (ECF No. 139.) For 18 the reasons set forth below, the Court will grant this Motion, and dismiss Defendant’s 19 counterclaims. 20 BACKGROUND 21 Plaintiff filed this action on October 31, 2022, to reduce to judgment federal tax 22 assessments against Defendant and to foreclose federal tax liens on Defendant’s 23 property located in Lodi, California. (ECF No. 1.) Plaintiff filed an amended complaint 24 on June 23, 2023, adding additional claims against Defendant. (ECF No. 76.) 25 On January 24, 2024, Defendant answered Plaintiff’s First Amended Complaint. 26 (ECF No. 133.) In his Answer, Defendant asserted two counterclaims for (1) an 27 injunction against ongoing Internal Revenue Service (“IRS”) levies and (2) a refund of 28 levied amounts already collected. (Id.) 1 On March 25, 2024, Plaintiff moved to dismiss these counterclaims for lack of 2 subject matter jurisdiction and for failing to state a claim. (ECF No. 139.) Defendant 3 failed to timely oppose. 4 The Court issued an Order to Show Cause (“OSC”) on April 19, 2024, ordering 5 Defendant to show cause within seven days why the Court should not construe 6 Defendant’s failure to file a timely opposition as a non-opposition to Plaintiff’s Motion. 7 (ECF No. 144.) The Court warned Defendant that failure to respond to the OSC could 8 result in dismissal of Defendant’s counterclaims. (Id.) Defendant failed to respond. 9 LEGAL STANDARD 10 Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss 11 claims for lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). A challenge to 12 subject matter jurisdiction may be either facial or factual. Safe Air for Everyone v. 13 Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). A facial attack “accepts the truth of the 14 plaintiff's allegations but asserts that they ‘are insufficient on their face to invoke 15 federal jurisdiction.’” Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014) (quoting 16 Safe Air for Everyone, 373 F.3d at 1039). By contrast, a factual attack “contests the 17 truth of the plaintiff's factual allegations, usually by introducing evidence outside the 18 pleadings.” Id. “When the defendant raises a factual attack, the plaintiff must support 19 her jurisdictional allegations with ‘competent proof,’ under the same evidentiary 20 standard that governs in the summary judgment context.” Id. (quoting Hertz Corp v. 21 Friend, 559 U.S. 77, 96–97 (2010)). 22 ANALYSIS 23 The Court holds that it lacks subject matter jurisdiction over Defendant’s 24 counterclaims because Plaintiff has not waived sovereign immunity as to those claims. 25 Accordingly, the Court will dismiss the counterclaims. 26 The United States is a sovereign entity and may not be sued without its consent. 27 Dunn & Black, P.S. v. United States, 492 F.3d 1084, 1087–88 (9th Cir. 2007). Thus, a 28 1 “waiver of sovereign immunity is a prerequisite to federal-court jurisdiction.” Tobar v. 2 United States, 639 F.3d 1191, 1195 (9th Cir. 2011). 3 Under the Anti-Injunction Act (“Act”), a taxpayer cannot bring any action against 4 the United States “for the purpose of restraining the assessment or collection of any 5 tax” subject to certain exceptions. 26 U.S.C. § 7421(a); Elias v. Connett, 908 F.2d 521, 6 523 (9th Cir. 1990) (listing the exceptions). Here, Defendant asserts that both of his 7 counterclaims fall within a limited waiver of sovereign immunity contained in 26 U.S.C. 8 § 6213(a). (See ECF No. 133.) Section 6213 provides that a taxpayer can sue to enjoin 9 levies which began prior to the issuance of a notice of deficiency, or before the 10 expiration of a 90-day period following issuance of such notice of deficiency. See 26 11 U.S.C. § 6213(a). That statutory provision also states that a court may issue a refund of 12 any amount collected by any such levies. Id. 13 The waiver of sovereign immunity in 26 U.S.C. § 6213(a) does not apply to 14 Defendant’s counterclaims. Plaintiff has provided proof that the IRS sent Defendant a 15 notice of deficiency on October 23, 2018.1 (Torres Decl. (ECF No. 139-1) Ex. 2, Ex. 3.) 16 Plaintiff has also provided proof that the IRS did not assess taxes against Defendant 17 until April 29, 2019, or begin levying any amounts until at least August 19, 2019, well 18 past the required 90-day period. (Id. Ex. 4.) Thus, the Court does not have jurisdiction 19 over Defendant’s counterclaims. See, e.g., Elias, 908 F.2d at 523–24 (affirming that the 20 district court did not have jurisdiction where the IRS did not assess, levy, or collect any 21 of the deficiencies either before the notices were sent or during the ninety-day period 22 after the notices were sent). Defendant relies on no other statutory provision to 23 establish a waiver of sovereign immunity. 24 Accordingly, Defendant’s counterclaims must be dismissed for lack of subject- 25 matter jurisdiction. 26 //// 27 28 1 Such evidence is permitted as Plaintiff mounts a factual attack to Defendant’s counterclaims. 1 CONCLUSION 2 In accordance with the above, it is hereby ORDERED: 3 1. Plaintiff's Motion to Dismiss (ECF No. 139) is GRANTED; 4 2. Defendant's counterclaims are DISMISSED without prejudice; 5 3. Should Defendant wish to amend his counterclaims, he may file a request 6 for leave to amend with the Court and shall attach his proposed amended 7 answer as an exhibit to his moving papers; and 8 4. The motion hearing set for 5/9/2024 at 1:30 PM is VACATED. 9 10 IT IS SO ORDERED. 11 | Dated: _May 1, 2024 Donal J Ch brett Hon. Daniel alabretta 12 UNITED STATES DISTRICT JUDGE 13 14 15 16 DJC4 - Bryan22cv1962.MotDismiss 17 18 19 20 21 22 23 24 25 26 27 28