Opinion
Civil No. WDQ-04-639.
January 31, 2005
MEMORANDUM OPINION AND ORDER
Citing 28 U.S.C. § 1340, Russell G. Ruggerio brought an action against the United States of America to quiet title. Pending are Ruggerio's motion for summary judgment and the United States' cross motion for summary judgment. For the following reasons, Ruggerio's motion for summary judgment will be granted, and the United States' cross motion for summary judgment will be denied.
I. BACKGROUND
On January 14, 2003, Ruggerio and Rocky A. Kimbrew entered into a contract of sale for real property in Ocean City, Maryland (the "Property"). On April 7, 2003, the day before settlement, the Department of Treasury filed two federal tax liens against Kimbrew. On January 27, 2004, the Department of Treasury informed Ruggerio that in satisfaction of Kimbrew's liens the Property would be seized. Ruggerio alleges that these liens are neither valid nor enforceable. On March 24, 2004, Ruggerio filed this action.
II. LEGAL DISCUSSION
A. Motion for Summary Judgment
1. Standard of Review
Summary judgment is appropriate when there is no genuine issue of any material fact, and the moving party is entitled to judgment as a matter of law. In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986), the Supreme Court explained that, in considering a motion for summary judgment, "the judge's function is not . . . to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248. Thus, "the judge must ask . . . whether a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented." Id. at 252.
The court must view the facts and the reasonable inferences drawn therefrom "in the light most favorable to the party opposing the motion," Matsushita Electric Industrial Company v. Zenith Radio Corp., 475 U.S. 574, 587 (1986), but the opponent must produce evidence upon which a reasonable fact finder could rely. Celotex Corp. v. Catrett, 477 U.S. 317 (1986). The mere existence of a "scintilla" of evidence is not sufficient to preclude summary judgment. Anderson, 477 U.S. at 252.
2. Waiver of Sovereign Immunity
The United States may not be sued without its consent; consent is a prerequisite for jurisdiction. Randall v. United States of America, 95 F.3d 339,345 (4th Cir. 1996) ( quoting United States v. Mitchell, 463 U.S. 206, 212 (1983)). A waiver of the traditional sovereign immunity cannot be implied but must be unequivocally expressed. United States v. Testan, 424 U.S. 392, 399 (1976) ( quoting United States v. King, 395 U.S. 1, 4 (1969)). Title 28 of the U.S. Code, § 2410(a) waives the Government's sovereign immunity in quiet title actions. The United States contends that this Court lacks jurisdiction because Ruggerio failed to plead waiver of sovereign immunity.
Ruggerio brings this action solely under 28 U.S.C. § 1340, a general jurisdictional statute which is not a waiver of sovereign immunity. See Randall, 95 F.3d at 345. Although Ruggerio failed to plead 28 U.S.C. § 2410(a), the Court has examined the complaint and determined that the allegations support jurisdiction. See Randall, 95 F.3d at 345 ("all pleadings shall be construed as to do substantial justice"). In quiet title actions, the complaint must include the name and address of the delinquent taxpayer, the identity of the internal revenue office filing the lien notice and the date and place of filing. See 28 U.S.C. § 2410 (b). As Ruggerio has complied with these requirements, the Court has jurisdiction.
3. Whether Ruggerio's property is subject to the tax liens
The United States may impose a lien upon a delinquent tax payer's real or personal property. See 26 U.S.C. § 6321. State law controls in determining the nature of the legal interest which the taxpayer had in the property. United States v. National Bank of Commerce, 472 U.S. 713, 722 (1985). Maryland recognizes the doctrine of equitable conversion. Upon execution of a contract of sale, the purchaser becomes the equitable owner of the property and the seller retains bare legal title. See Watson v. Watson, 304 Md. 48, 60 (1985). Thereafter, the seller's property interests are limited to the proceeds of the sale. See id.
When the Defendant filed the tax liens, Kimbrew's interest in the Property was limited to his anticipated proceeds from the sale. The tax liens did not attach to the Property but rather to Kimbrew's interest in the proceeds of the sale. See SMS Associates v. Clay, 868 F.Supp. 337, 344 (D.D.C. 1994). The United States contends that the liens attached to the Property because the liens had priority over Ruggerio's interests under 26 U.S.C. § 6323. Section 6323 governs the validity and priority of liens imposed against a taxpayer's property. See 26 U.S.C. § 6323. This section merely established the priority of the Government's liens against the sale proceeds. See National Bank of Commerce, 472 U.S. at 722 ("revenue statutes do not create property rights but merely attaches federally defined consequences to rights created under state law"). Accordingly, the plaintiff's motion for summary judgment will be granted.
III. CONCLUSION
For the reasons discussed above, Ruggerio's motion for summary judgment will be granted and the United States' cross motion for summary judgment will be denied.