The opinion of the court was delivered by: Sandra S. Beckwith, Chief Judge United States District Court
This matter is before the Court on the motion to dismiss filed by the United States of America (Doc. No. 10). For the reasons set forth below, Defendant's motion is not well-taken and is DENIED.
Plaintiff Fifth Third Bank filed this lawsuit to recover an alleged wrongful levy by the United States. According to the complaint, Fifth Third extended credit to PJH Construction, Inc. ("PJH") and obtained a security interest in various items of collateral, including PJH's accounts and accounts receivable. Fifth Third perfected its security interest by filing the appropriate UCC forms with the Ohio Secretary of State in December 2003.
On May 15, 2005, Fifth Third determined that PJH was in default on the loan. On July 15, 2005, PJH informed Fifth Third that it was delinquent paying the Internal Revenue Service unemployment and withholding taxes. PJH further informed Fifth Third that on August 27, 2004, the IRS had issued a notice of levy on an account receivable owed to PJH by Wittrock Woodworking ("Wittrock") to collect the taxes. On September 20, 2004, Wittrock remitted a check to the IRS in the amount of $102,209.24.
Fifth Third immediately filed suit against PJH as a result of its default and obtained a confessed judgment on July 27, 2005. The same day, Fifth Third contacted the IRS and requested the IRS to surrender the funds seized pursuant to the Wittrock levy on the grounds of its prior perfected security interest. Fifth Third followed up its initial contact to the IRS with letters formally requesting return of the levied funds. Eventually, however, the IRS denied Fifth Third's claim on the grounds that it was filed more than nine months after the notice of levy issued. On information and belief, Fifth Third further states that the IRS has wrongfully levied on accounts held by PJH at Union Savings Bank on January 20, 2005 and May 3, 2005.
On March 8, 2006, Fifth Third filed a complaint pursuant to 26 U.S.C. § 7426 to recover wrongfully levied funds. The complaint also alleges that 28 U.S.C. § 6330(a)(1) violates the Fifth Amendment Due Process Clause because it does not require the Secretary of the Treasury to give notice of intent to levy to persons with security interests in the property to be levied. Fifth Third seeks return of the $102,209.24 turned over to the IRS by Wittrock as well as an amount to be determined from PJH's accounts at Union Savings Bank.
The United States now moves to dismiss Fifth Third's complaint. The United States argues that the Court does not have subject matter jurisdiction over the claim concerning the Wittrock levy because Fifth Third filed a claim for a return of wrongfully levied funds more than nine months after the levy issued. The United States further argues that Fifth Third's claim concerning the alleged wrongful levy of the Union Savings Bank fails to state a claim because its records indicate that no such levy ever occurred.
In opposition, Fifth Third argues that the nine month statute of limitations to file a wrongful levy claim should be equitably tolled because it was unaware that a levy had taken place until after the statute of limitations had expired. Fifth Third also argues that whether the United States levied the Union Savings Bank accounts is a question of fact to be determined, but in any event does not pose a jurisdictional bar to this lawsuit. Fifth Third indicates that it intends to voluntarily dismiss this claim if it determines that no levy of these accounts occurred.
In pertinent part, 26 U.S.C. § 6532 provides: Suits by persons other than taxpayers.--(1) General rule.--Except as provided by paragraph (2), no suit or proceeding under section 7426 shall be begun after the expiration of 9 months from the date of the levy or agreement giving rise to such action.
26 U.S.C. § 6532(c)(1). In this case, on the facts alleged, it is undisputed that as to its main claim, Fifth Third filed a claim for return of funds more than nine months after the notice of levy. The issue raised by the pleadings is whether equitable tolling is available to Fifth Third such that its wrongful levy claim may be deemed timely filed.
The Sixth Circuit has explained the jurisdictional nature of § 6532:
As with most periods of limitation involving suits against the sovereign, the prerequisites to suit described in section 6532's "general rule" are jurisdictional. Johnson v. United States, 81-1 U.S.T.C. ¶ 9298 (6th Cir. 1981) (per curiam) (affirming lower court's ruling that it lacked jurisdiction on account of the taxpayer's failure to file suit within two years); Daniel v. United States, 454 F.2d 1166, 1167 (6th Cir. 1972) (per curiam) (same). See also Dalton v. United States, 800 F.2d 1316, 1319 (4th Cir. 1986) (section 6532(a) is a statute of limitations which may divest a court of its subject matter jurisdiction unless time is extended); Dieckmann v. United States, 550 F.2d 622, 623-24 (10th Cir. 1977) (statute of limitations on wrongful levy suits under section 6532(c) is jurisdictional). Accordingly, when jurisdictional facts are challenged, the party claiming jurisdiction bears the burden of demonstrating that the court has jurisdiction over the subject matter. See, e.g., Rogers v. Stratton Indus., Inc., 798 F.2d 913, 915 (6th Cir. 1986) (per curiam). The burden is on the plaintiff since the statute outlines the terms under which the United States has waived sovereign immunity and thereby consented to suit. See generally Dalm, 110 S.Ct. at 1368-69.
Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 324 (6th Cir. 1990)(internal footnotes omitted). Thus, if Fifth Third's claim is not deemed to be timely, the Court does not have subject matter jurisdiction over the Wittrock wrongful levy claim.
The principal case on point is United States v. Brockamp, 519 U.S. 347 (1997). In Brockamp, the question raised was "[c]an courts toll, for non-statutory equitable reasons, the statutory time (and related amount) limitations for filing tax refund claims set forth in § 6511 of the Internal Revenue Code of 1986?" Id. at 348.*fn1 Respondents in the case were taxpayers with disabilities that caused them to miss the deadline for filing tax refund claims by several years. They argued, however, that their disabilities provided equitable grounds for tolling the limitations period in § 6511. Id. at 348-49. Nevertheless, the Court concluded that equitable tolling is not available under § 6511. Id. at 354. The Court concluded that, in contrast to Title VII of the Civil Rights Act of 1964, which it had previously ruled allows equitable tolling,*fn2 Congress did not intend equitable tolling to apply to § 6511. The difference, the Court said, was that whereas the limitations period in Title VII uses "fairly simple language" which can plausibly be read as containing an implied equitable tolling exception, § 6511 "sets forth its limitations in a highly detailed technical manner, that, linguistically speaking, cannot be easily read as containing implied exceptions." Id. at 350. The Court concluded ...