Becton Dickinson v. Wolckenhauer , 215 F.3d 340 ( 2000 )

Opinions of the United
2000 Decisions States Court of Appeals
for the Third Circuit
6-6-2000
Becton Dickinson v. Wolckenhauer
Precedential or Non-Precedential:
Docket 99-6015
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Filed June 6, 2000
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 99-6015
BECTON DICKINSON AND COMPANY,
Appellant
v.
REINHARD A. WOLCKENHAUER,
a/k/a REINHARD WOLKENHAUER;
WALTER WOLCKENHAUER; ROYAL MACHINE
AND TOOL COMPANY; WILLIAM HOSIE;
ANN HOSIE, d/b/a HANOVER PATTERN;
UNITED STATES OF AMERICA, DEPARTMENT
OF THE TREASURY, INTERNAL REVENUE SERVICE
Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 95-cv-01084)
District Judge: Honorable Nicholas H. Politan
Argued March 2, 2000
Before: ROTH, BARRY and STAPLETON, Circuit Judges
(Opinion filed: June 6, 2000)
Armen Shahinian, Esquire (Argued)
Adam P. Friedman, Esquire
Wolff & Samson
5 Becker Farm Road
Roseland, NJ 07068
Attorneys for Appellant
Gilbert S. Rothenberg, Esquire
Steven W. Parks, Esquire (Argued)
United States Department of Justice
Tax Division
P.O. Box 502
Washington, DC 20044
Attorneys for Appellee
OPINION OF THE COURT
ROTH, Circuit Judge:
The appellant in this case, Becton Dickinson & Company
("BDC"), brought suit against the Internal Revenue Service
(the "IRS") pursuant to 26 U.S.C. S 7426(a)(1), seeking the
return of $323,948.44, the value of Reinhard
Wolckenhauer's pension and retirement benefits held by
BDC and seized by the IRS to satisfy Wolckenhauer's tax
liability. BDC contends that this money should be paid not
to the IRS, but rather to BDC as restitution for the fraud
perpetrated on the company by Wolckenhauer.
Although BDC's suit to recover this money was filed after
the expiration of the nine-month time limitation period, set
forth in section 6532(c) of the Internal Revenue Code, BDC
argues that the time limitation in section 6532(c) can and
should be equitably tolled.1 BDC contends for that reason
that the restitution order handed down by the District
Court in Wolckenhauer's criminal trial grants them an
_________________________________________________________________
1. There are two distinct questions: Can the time limitation in section
6532(c) be equitably tolled and, if so, do the facts of this case give
rise
to a situation in which the time limitation in section 6532(c) should be
equitably tolled?
2
interest in the $323,948.44 seized by the IRS to satisfy
Wolckenhauer's tax liability. Finally, assuming that it
possesses an interest in this money, BDC argues that its
restitution interest in Wolckenhauer's pension and
retirement benefits is superior to the IRS's tax liability
interest.
The IRS and BDC each filed motions for summary
judgment. The District Court, after concluding that the time
limitation set forth in 26 U.S.C. S 6532(c) could be equitably
tolled, held that the facts of the case did not give rise to a
situation in which the time limitation should be equitably
tolled, denied BDC's motion for summary judgment, and
granted the IRS's motion for summary judgment. Because
we conclude that the time limitation in section 6532(c) is a
jurisdictional bar that cannot be equitably tolled, regardless
of the equities in a given case, we will remand the case to
the District Court with instructions to dismiss the case for
lack of subject matter jurisdiction.2
I. FACTS
The relevant facts in this case are undisputed by the
parties. While employed at Ivers-Lee,3 Reinhard
Wolckenhauer4 defrauded Ivers-Lee by means of an
elaborate scheme involving fraudulent purchasing invoices.
On February 28, 1995, Wolkenhauer was indicted for
conspiracy (one count), mail fraud (fifteen counts) and the
_________________________________________________________________
2. Because we conclude that section 6532(c) cannot be equitably tolled,
we need not reach the question of whether the time limitation in section
6532(c) should be equitably tolled or whether BDC's restitution interest
in Wolckenhauer's pension and retirement benefits is superior to the
IRS's tax liability interest. Were we, however, to reach that question,
Judges Roth and Barry believe that a strong argument could be made
that in the unique circumstances of this case, i.e., where Wolckenhauer's
tax liability arose solely as the result of the fraud he perpetrated on
BDC
and where the government levied on his pension and retirement benefits
held by BDC, thus depriving BDC -- the victim-- of restitution, BDC's
restitution interest is superior to the government's tax liability
interest.
3. Ivers-Lee is a division of Becton Dickinson & Company.
4. Wolckenhauer is an appellee in name only. This appeal arises entirely
out of a dispute between the IRS and BDC.
3
filing of false income tax returns (four counts). On April 21,
1995, the IRS, which had been investigating
Wolckenhauer's criminal activities, issued a notice of levy to
the Ivers-Lee division of BDC indicating that Wolckenhauer
owed $865,240.06 in unpaid federal income taxes for the
tax years 1988, 1989, 1990 and 1991.5 The notice of levy
directed BDC to relinquish to the IRS all money that BDC
then owed Wolckenhauer. Pursuant to this notice of levy,
on May 2, 1995, BDC remitted to the IRS $323,948.44, the
value of Wolckenhauer's pension and retirement benefits.
On March 22, 1996, Wolckenhauer pleaded guilty to
conspiracy, mail fraud and the filing of false income tax
returns. The government and Wolckenhauer stipulated in
the plea agreement that the financial loss to BDC as a
result of Wolckenhauer's fraudulent scheme was no less
than $1.5 million, but no more than $2.5 million. On
September 24, 1996, the District Court in Wolckenhauer's
criminal case entered an order requiring Wolckenhauer to
make restitution to BDC in the amount of $2.2 million. On
November 7, 1996, BDC, which had already brought suit
against Wolckenhauer and other individuals in connection
with Wolckenhauer's fraudulent scheme, filed an amended
complaint in the District Court asserting a cause of action
against the IRS for the alleged wrongful levy on
Wolckenhauer's pension and retirement benefits. Suing
under 26 U.S.C. S 7426(a)(1), BDC contended that "[the
September 24, 1996,] order of restitution issued in favor of
Becton Dickinson has priority over and is superior to the
[government's] federal tax liens." App. at A74.
On May 29, 1997, the Court of Appeals for the Third
Circuit vacated the September 24, 1996, restitution order
and remanded the case to the District Court for additional
fact-finding concerning Wolckenhauer's assets and the
needs of his dependent family members. On March 12,
1998, the District Court in Wolckenhauer's criminal case
amended the restitution order and directed Wolckenhauer
to pay $83,200 in restitution to BDC.
_________________________________________________________________
5. The tax liability that Wolckenhauer incurred arose entirely from
income "earned" by means of this fraudulent scheme.
4
Finally, on July 15, 1998, at the request of BDC and
Wolckenhauer, the District Court in Wolckenhauer's
criminal case modified the March 12, 1998, restitution
order, taking into account the possibility that BDC might
prevail in this litigation against the IRS. The amended
restitution order requires Wolckenhauer to make restitution
to BDC in the amount of $407,148.44, to be reduced to
$83,200 in the event that BDC does not obtain a favorable
judgment in this case.6
BDC brings this wrongful levy action pursuant to 26
U.S.C. S 7426(a)(1), seeking to recover the value of
Wolckenhauer's pension and retirement benefits from the
IRS to satisfy the aforementioned restitution order. 7 On
March 3 and 5, 1997, respectively, the IRS and BDC each
filed motions for summary judgment. On October 28, 1998,
the District Court denied BDC's motion for summary
judgment and granted the IRS's motion for summary
judgment, holding that: (1) BDC's wrongful levy claim
against the IRS was barred by the time limitation set forth
in 26 U.S.C. S 6532(c);8 (2) even if BDC's claim were not
time-barred, BDC possessed no interest in Wolckenhauer's
retirement and pension benefits; and (3) even if BDC
possessed an interest in Wolckenhauer's retirement and
pension benefits, its interest was junior to the IRS's
interest. BDC appeals the District Court's grant of
summary judgment.
_________________________________________________________________
6. Were BDC to prevail in this litigation, it would be entitled to the
$323,948.44 seized by the IRS pursuant to the April 21, 1995, notice of
levy. $407,148.44 is the sum of the amount seized by the IRS pursuant
to its notice of levy ($323,948.44) and the amount of restitution required
under the March 12, 1998, restitution order ($83,200).
7. The claims asserted by BDC against parties other than the IRS were
dismissed by consent orders entered on January 12 and April 22, 1998.
8. While the District Court concluded that the time limitation in section
6532(c) could be equitably tolled, the District Court also concluded that
the facts of this case did not give rise to a situation in which the time
limitation should be equitably tolled. See supra note 1.
5
II. JURISDICTION & STANDARD OF REVIEW
Jurisdiction in this case is at issue. However, the District
Court did have jurisdiction, pursuant to 28 U.S.C.S 1331,
to determine if it had subject matter jurisdiction over BDC's
claim. See 28 U.S.C. S 1331 (1999) ("The district courts
shall have original jurisdiction of all civil actions arising
under the Constitution, laws, or treaties of the United
States."). We have jurisdiction, pursuant to 28 U.S.C.
S 1291, to determine whether the District Court properly
exercised subject matter jurisdiction over BDC's claim. See
28 U.S.C. S 1291 (1999) ("The courts of appeals . . . shall
have jurisdiction of appeals from all final decisions of the
district courts of the United States . . . ."). Although the
parties did not address the issue of jurisdiction per se, as
we have held previously, "it is axiomatic that this [C]ourt
has a special obligation to satisfy itself of its own
jurisdiction, as well as the jurisdiction of the court under
review." United States v. Touby, 909 F.2d 759, 763 (3d Cir.
1990) (internal quotation marks omitted) (citations omitted).
Our review of the District Court's grant of summary
judgment is plenary. See, e.g., Hurley v. Atlantic City Police
Dept., 174 F.3d 95, 128 n.29 (3d Cir. 1999).
[We] review the district court's summary judgment
determination de novo, applying the same standard as
the district court. . . . [I]n all cases[,] summary
judgment should be granted if, after drawing all
reasonable inferences from the underlying facts in the
light most favorable to the non-moving party, the court
concludes that there is no genuine issue of material
fact to be resolved at trial[,] and [that] the moving party
is entitled to judgment as a matter of law.
Kornegay v. Cottingham, 120 F.3d 392, 395 (3d Cir. 1997)
(quoting Spain v. Gallegos, 26 F.3d 439, 446 (3d Cir.
1994)). In determining whether the District Court erred, we
must view the facts as asserted by the nonmoving party as
true, if they are supported by affidavits or other evidentiary
material. See Aman v. Cort Furniture Rental Corp., 85 F.3d
1074, 1080 (3d Cir. 1996). We also must draw all
reasonable inferences in favor of the nonmoving party. See
id. at 1081. A nonmoving party has created a genuine issue
6
of material fact if it has provided sufficient evidence to allow
a jury to find in its favor at trial. See Brewer v. Quaker
State Oil Refining Corp., 72 F.3d 326, 330 (3d Cir. 1995).
III. DISCUSSION
A. Relevant Statutory Language
Section 7426(a)(1) provides third parties with a civil
cause of action to recover from the IRS property"wrongfully
levied." 26 U.S.C. S 7426(a)(1) (1999); see, e.g., Internal
Revenue Service v. Gaster, 42 F.3d 787, 789 (3d Cir. 1994).
Section 6532(c) of the Internal Revenue Code, which sets
forth the relevant time limitation for wrongful levy actions
brought pursuant to section 7426(a)(1), states:
c) 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.
(2) Period when claim is filed.--If a request is made
for the return of property [wrongfully levied upon],
the 9-month period prescribed in paragraph (1) shall
be extended for a period of 12 months from the date
of filing of such request or for a period of 6 months
from the date of mailing by registered or certified
mail by the Secretary to the person making such
request of a notice of disallowance of the part of the
request to which the action relates, whichever is
shorter.
26 U.S.C. S 6532(c) (1999). Thus, as the statute clearly
indicates, "no suit or proceeding under section 7426 shall
be begun after the expiration of 9 months from the date of
the levy." 26 U.S.C. S 6532(c)(1) (1999).
While it is undisputed that BDC's claim was filed after
the nine-month time limitation set forth in 26 U.S.C.
S 6532(c)(1) had expired, BDC argues that the time
limitation should be equitably tolled.9 Specifically, BDC
_________________________________________________________________
9. The IRS issued the notice of levy on April 21, 1995; BDC brought suit
under section 7426(a)(1) against the IRS on November 7, 1996, over
eighteen months later.
7
argues that because the order requiring Wolckenhauer to
pay restitution to BDC was not handed down until after the
nine-month time limitation in section 6532(c) had expired,
it did not acquire an interest in Wolckenhauer's pension
and retirement benefits until after the time limitation in
section 6532(c) had expired. Therefore, BDC argues,
because it could not have brought suit against the IRS until
it acquired an interest in Wolckenhauer's pension and
retirement benefits, which occurred after the time limitation
in section 6532(c) had expired, this time limitation should
be equitably tolled now to allow BDC to bring suit pursuant
to section 7426(a)(1).
B. Principles for Determining the Appropriateness of
Equitable Tolling
Before determining whether the time limitation in section
6532(c) should be equitably tolled, we must first determine
whether the time limitation in section 6532(c) can be
equitably tolled. As we have held on numerous occasions:
Time limitations analogous to a statute of limitations
are subject to equitable modifications such as tolling,
see Oshiver v. Levin, Fishbein, Sedran & Berman , 38
F.3d 1380, 1387 (3d Cir. 1994), which "stops the
running of the statute of limitations in light of
established equitable considerations," New Castle
County v. Halliburton NUS Corp., 111 F.3d 1116, 1125
(3d Cir. 1997). On the other hand, when a time
limitation is considered jurisdictional, it cannot be
modified and non-compliance is an absolute bar. See
Oshiver, 38 F.3d at 1387.
Miller v. New Jersey State Dep't of Corrections , 145 F.3d
616, 617-18 (3d Cir. 1998); see also Seitzinger v. Reading
Hosp. and Med. Ctr., 165 F.3d 236, 239-40 (3d Cir. 1999)
(holding that Title VII's 90-day time limitation is akin to a
statute of limitations and thus is subject to equitable
tolling); New Castle County v. Halliburton NUS Corp., 111
F.3d 1116, 1126 n.12 (3d Cir. 1997) ("Where thefiling
requirements are considered `jurisdictional,' non-
compliance bars an action regardless of the equities in a
given case." (quoting Hart v. J. T. Baker Chem. Co., 598
F.2d 829, 832 (3d Cir.1979))) (internal quotation marks
8
omitted); Oshiver v. Levin, Fishbein, Sedran & Berman, 38
F.3d 1380, 1387 (3d Cir. 1994) (same); Shendock v.
Director, Office of Workers' Compensation Programs , 893
F.2d 1458, 1462-64 (3d Cir. 1990) (en banc) ("When
Congress intends the sixty days it specified as the time to
seek review of an adverse Board decision in a court of
appeals to be a mandatory condition upon the availability
of the judicial remedy of review, the statutory provisions
relating to the time and place of filing are termed
`jurisdictional.' "). To determine whether the time limitation
in section 6532(c) is a statute of limitations, which can be
equitably tolled, or a jurisdictional bar, which cannot be
tolled, regardless of the equities in a given case,"we look to
congressional intent by considering the language of the
statute, legislative history, and statutory purpose." Miller,
145 F.3d at 618; see Shendock, 893 F.2d at 1462-64.
In making this determination, Supreme Court
jurisprudence provides significant guidance. As the
Supreme Court has stated, "[t]ime requirements in lawsuits
between private litigants are customarily subject to
`equitable tolling.' " Irwin v. Department of Veterans Affairs,
498 U.S. 89, 95 (1990) (citing Hallstrom v. Tillamook
County, 493 U.S. 20, 27 (1989)); see also, e.g., United
States v. Midgley, 142 F.3d 174, 179 (3d Cir. 1998)
("[E]quitable tolling may be appropriate if (1) the defendant
has actively misled the plaintiff, (2) if the plaintiff has `in
some extraordinary way' been prevented from asserting his
rights, or (3) if the plaintiff has timely asserted his rights
mistakenly in the wrong forum." (quoting Kocian v. Getty
Ref. & Mktg Co., 707 F.2d 748, 753 (3d Cir. 1983)))
(internal quotation marks omitted). This case, however, is
not a "lawsuit between private litigants;" BDC is suing the
government, not a private litigant. Because the time
limitation in section 6532(c) is applicable exclusively to
suits brought under section 7426, and because section
7426 creates only a cause of action against the United
States, and not against private litigants, it is inappropriate
to assume that the time limitation in section 6532(c) is
necessarily like other time limitations that are"customarily
subject to `equitable tolling.' "
Moreover, because BDC is suing the United States, and
not a private litigant, sovereign immunity is implicated. It is
9
black letter law that "the United States cannot be sued . .
. without the consent of Congress." Block v. North Dakota,
461 U.S. 273, 287 (1983). Section 7426 clearly constitutes
a waiver of sovereign immunity. Thus, as the Supreme
Court has stated on myriad occasions:
[W]hen Congress attaches conditions to legislation
waiving the sovereign immunity of the United States,
those conditions must be strictly observed, and
exceptions thereto are not to be lightly implied. When
waiver legislation contains a statute of limitations, the
limitations provision constitutes a condition on the
waiver of sovereign immunity. Accordingly, although we
should not construe such a time-bar provision unduly
restrictively, we must be careful not to interpret it in a
manner that would "extend the waiver beyond that
which Congress intended."
Id.; see also Lane v. Pena, 518 U.S. 187, 192 (1996) ("[A]
waiver of the Government's sovereign immunity will be
strictly construed, in terms of its scope, in favor of the
sovereign."); United States v. Williams, 514 U.S. 527, 531
(1995) (holding that when confronted with a purported
waiver of the federal government's sovereign immunity, the
Court will "constru[e] ambiguities in favor of immunity");
United States v. Mottaz, 476 U.S. 834, 841(1986) ("When
the United States consents to be sued, the terms of its
waiver of sovereign immunity define the extent of the
court's jurisdiction.") (citing United States v. Sherwood, 312
U.S. 584, 586 (1941)); Bowen v. City of New York , 476 U.S.
467, 479 (1986) (holding that the "the 60-day limitation" for
bringing suit against the government to contest the denial
or termination of social security benefits is"a condition on
the waiver of sovereign immunity, and thus must be strictly
construed"); Lehman v. Nakshian, 453 U.S. 156, 161 (1981)
("[L]imitations and conditions upon which the Government
consents to be sued must be strictly observed and
exceptions thereto are not to be implied."). Thus, in
determining whether the time limitation in section 6532(c)
is a statute of limitations, which can be equitably tolled, or
a jurisdictional bar, which cannot, we are mindful of the
fact that section 7426(a)(1), the statutory provision
pursuant to which BDC brings suit against the government,
10
is a waiver of sovereign immunity. Moreover, section
6532(c), which sets forth the time limitation applicable to a
wrongful levy action brought against the government
pursuant to section 7426, is a condition on the waiver of
sovereign immunity expressed in section 7426(a)(1) and
must be strictly observed; exceptions are not to be lightly
implied.
1. Irwin v. Department of Veterans Affairs
Against the backdrop of these general principles, the
Supreme Court has on two occasions since 1990
considered when a time limitation applicable to a lawsuit
brought against the government can be equitably tolled.
The Supreme Court, like the Third Circuit, in determining
when such time limitations can be equitably tolled, has
focused exclusively on congressional intent. See United
States v. Brockamp, 519 U.S. 347, 353 (1997)
("[C]ongressional efforts . . . seem but a smaller part of a
larger congressional objective: providing the Government
with strong statutory `protection against stale demands.' ")
(citations omitted); Irwin v. Department of Veterans Affairs,
498 U.S. 89, 95 (1990); Miller, 145 F.3d at 618 ("in
determining whether a specific time limitation should be
viewed as a statute of limitations or a jurisdictional bar, we
look to congressional intent by considering the language of
the statute, legislative history, and statutory purpose.").
First, in 1990, the Supreme Court considered whether
the time limitation set forth in 42 U.S.C. S 2000e-16(c), a
provision of Title VII, could be equitably tolled. See Irwin,
498 U.S. at 91.10 Before reaching the merits of the case, the
Court acknowledged the inconsistency of past Supreme
Court opinions that addressed when time limitations
applicable to lawsuits against the government could be
_________________________________________________________________
10. Section 2000e-16(c) stated in relevant part:
Within thirty days of receipt of notice of final action taken by .
. . the
Equal Employment Opportunity Commission . . . and employee or
applicant for employment, if aggrieved by the final disposition of
his
complaint, or by the failure to take final action on his complaint,
may file a civil action as provided in section 2000e-5 of this
title.
42 U.S.C. S 2000e-16(c) (1986).
11
equitably tolled.11 Characterizing its opinion as an attempt
to develop a coherent framework for determining when
equitably tolling is appropriate, the Court in Irwin stated:
Thus, a continuing effort on our part to decide each
case on an ad hoc basis, as we appear to have done in
the past, would have the disadvantage of continuing
unpredictability without the corresponding advantage
of greater fidelity to the intent of Congress. We think
that this case affords us an opportunity to adopt a
more general rule to govern the applicability of
equitable tolling in suits against the Government.
Id. at 95. Addressing the specific time limitation at issue,
the Irwin Court acknowledged that "section 2000e-16(c) is
a condition to the waiver of sovereign immunity and thus
must be strictly construed." Id. at 93 (citing Library of
Congress v. Shaw, 478 U.S. 310 (1986)). However, the
Court concluded that
[o]nce Congress has made such a waiver, . . . making
the rule of equitable tolling applicable to suits against
the Government, in the same way that it is applicable
to private suits, amounts to little if any broadening of
the congressional waiver [and therefore] the same
rebuttable presumption of equitable tolling applicable
to suits against private defendants should also apply to
suits against the United States.
Id. at 95. As this language demonstrates, the Irwin Court
concluded that because private defendants could be sued
under 42 U.S.C. S 2000e-5, and because the applicable
time limitation could be equitably tolled in lawsuits
between private litigants, Congress must have intended for
the time limitation to be equitably tolled (when appropriate)
in lawsuits brought against the government. See id.12
_________________________________________________________________
11. See, e.g., Bowen v. City of New York, 476 U.S. 467, 479 (1986);
Soriano v. United States, 352 U.S. 270, 275-76 (1957).
12. Although the Irwin Court held that the time limitation set forth in
section 2000e-16(c) could be equitably tolled, the Court eventually
concluded that the facts of the case before it did not give rise to a
situation where the statute of limitations should be tolled. See Irwin,
498
U.S. at 96; supra note 1.
12
2. United States v. Brockamp
Subsequent to its holding in Irwin, the Supreme Court
again addressed the issue of when a time limitation
applicable to a lawsuit against the government can be
equitably tolled. See United States v. Brockamp , 519 U.S.
347 (1997). The Court in Brockamp, considering whether
the time limitation set forth in 26 U.S.C. S 651113 could be
equitably tolled, was quick to point out that Irwin was not
controlling. See id. at 349-50. While the Irwin Court held
that "the same rebuttable presumption of equitable tolling
applicable to suits against private defendants should also
apply to suits against the United States," the Brockamp
Court noted that because section 6511 does not create a
cause of action against private defendants, the"rebuttable
presumption" created by the Court in Irwin arguably did
not apply to the time limitation set forth in section 6511.
Id. Nonetheless, the Brockamp Court assumed, but only for
the sake of argument, "that a tax refund suit and a private
suit for restitution are sufficiently similar to warrant asking
Irwin's negatively phrased question: Is there good reason to
believe that Congress did not want the equitable tolling
doctrine to apply?" Id. at 350.
_________________________________________________________________
13. Section 6511 is quite complex and states in part that a "[c]laim for
. . . refund . . . of any tax . . . shall be filed by the taxpayer within
3
years from the time the return was filed or 2 years from the time the tax
was paid, whichever of such periods expires the later, or if no return was
filed . . . within 2 years from the time the tax was paid." 26 U.S.C.
S 6511(a) (1986). The statute also states that"[n]o credit or refund shall
be allowed or made after the expiration of the period of limitation
prescribed . . . unless a claim for . . . refund isfiled . . . within such
period." 26 U.S.C. S 6511(b)(1). This point is reiterated:
If the claim was filed by the taxpayer during the 3-year period . .
.
the amount of the credit or refund shall not exceed the portion of
the tax paid within the period, immediately preceding the filing of
the claim, equal to 3 years plus the period of any extension of
time
for filing the return.
26 U.S.C. S 6511(b)(2)(A). Finally, the statute states that "[i]f the
claim
was not filed within such 3-year period, the amount of the credit or
refund shall not exceed the portion of the tax paid during the 2 years
immediately preceding the filing of the claim." 26 U.S.C. S 6511(b)(2)(B).
13
Thus, applying Irwin's rebuttable presumption and
addressing the specific time limitation in section 6511, the
Brockamp Court first noted that:
Section 6511 sets forth its time limitations in
unusually emphatic form. Ordinarily limitations
statutes use fairly simple language, which one can
often plausibly read as containing an implied
"equitable tolling" exception. See, e.g. , 42 U.S.C.
S 2000e-16(c) (requiring suit for employment
discrimination to be filed "[w]ithin 90 days of receipt of
notice of final [EEOC] action"). ButS 6511 uses
language that is not simple. It sets forth its limitations
in a highly detailed technical manner, that
linguistically speaking, cannot easily be read as
containing implicit exceptions.
Id. The Court also noted that:
Section 6511 sets forth explicit exceptions to its basic
time limits, and those very specific exceptions do not
include "equitable tolling." See [26 U.S.C.] S 6511(d)
(establishing special time limit rules for refunds related
to operating losses, credit carrybacks, foreign taxes,
self-employment taxes, worthless securities, and bad
debts).
Id. at 351-52. The Brockamp Court ultimately held that
Congress did not intend to permit equitable tolling with
respect to section 6511:
To read an "equitable tolling" provision into these
provisions, one would have to assume an implied
exception for tolling virtually every time a number
appears. To do so would work a kind of linguistic
havoc. Moreover, such an interpretation would require
tolling, not only procedural limitations, but also
substantive limitations on the amount of recovery--a
kind of tolling for which we have found no direct
precedent. Section 6511's detail, its technical language,
the iteration of the limitations in both procedural and
substantive forms, and the explicit listing of
exceptions, taken together indicate to us that Congress
did not intend courts to read other unmentioned, open-
14
ended, "equitable" exceptions into the statute that it
wrote. There are no counter-indications.
Id. at 352. Reinforcing this conclusion, the Court explained
that "[t]ax law, after all, is not normally characterized by
case specific exceptions reflecting individualized equities."
Id. The Brockamp Court further pointed out that:
The nature of the underlying subject matter--tax
collection--underscores the linguistic point. The IRS
processes more than 200 million tax returns each year.
It issues more than 90 million refunds. See Dept. of
Treasury, Internal Revenue Service, 1995 Data Book 8-
9. To read an "equitable tolling" exception into S 6511
could create serious administrative problems by forcing
the IRS to respond to, and perhaps litigate, large
numbers of late claims, accompanied by requests for
"equitable tolling" which, upon close inspection, might
turn out to lack sufficient equitable justification.
Id. at 352-53. Thus, a unanimous Court in Brockamp held
that the time limitation in section 6511 could not be tolled,
regardless of the equities in a given case.
C. Equitable Tolling and Section 6532(c)
Turning to the case at hand, and the time limitation in
section 6532(c), BDC argues that this time limitation is
analogous to the time limitation at issue in Irwin and thus
can be equitably tolled, while the IRS argues that this time
limitation is analogous to the time limitation at issue in
Brockamp and thus cannot be equitably tolled. While we
acknowledge that the time limitation at issue in this case
falls somewhere between the time limitation considered in
Irwin and the time limitation considered in Brockamp, we
conclude that section 6532(c) is a jurisdictional bar,
analogous in almost all relevant respects to the time
limitation at issue in Brockamp, and therefore that the time
limitation in section 6532(c) cannot be equitably tolled.
There are several reasons for our conclusion.
1. Suits Brought Only Against the Government
First, like the time limitation at issue in Brockamp, but
unlike the time limitation at issue in Irwin, the time
limitation in section 6532(c) applies only to suits brought
15
against the government and not suits brought against
private defendants. Indeed, section 7426(a)(1), which
section 6532(c) modifies, authorizes only suits against the
government. Thus, Irwin's "rebuttable presumption" does
not apply; "making the rule of equitable tolling applicable to
suits against the Government, in the same way that it is
applicable to private suits" has no meaning in the context
of a statute that creates only a cause of action against the
government.
BDC tries to counter this point by arguing that a suit at
common law for recovery of money converted is analogous
to a suit brought pursuant to section 7426(a)(1). Therefore,
BDC argues, making the rule of equitable tolling applicable
to suits against the government brought under section
7426(a)(1), in the same way that it is applicable to private
suits at common law for the recovery of money converted,
amounts to little if any broadening of the congressional
waiver, and thus the same rebuttable presumption of
equitable tolling applicable to suits against private
defendants at common law for the recovery of money
converted should also apply to suits against the United
States brought under section 7426. While this argument is
not without intuitive appeal, it fails as matter of law
because the time limitation set forth in section 6532(c) does
not and would not apply to private suits at common law for
the recovery of money converted.14 Our analysis is
reinforced by the Supreme Court's skepticism in Brockamp
that "a tax refund suit" brought under 26 U.S.C. S 7422
and "a private suit for restitution" are "sufficiently similar"
to warrant the application of Irwin's "rebuttable
presumption." Brockamp, 519 U.S. at 350 (citing sources
for the proposition that "a tax refund suit" brought under
26 U.S.C. S 7422 and "a private suit for restitution" are not
analogous); see also, e.g., Flora v. United States, 362 U.S.
_________________________________________________________________
14. There exists no federal statute, nor as a matter of federal
constitutional law could there exist a federal statute, creating a private
cause of action for the recovery of money converted by a private
individual or entity. Cf. United States v. Lopez , 514 U.S. 549, 567-68
(1995) (holding that prohibiting by means of federal criminal law the
possession of guns in and around local schools is an unconstitutional
extension of Congress's powers under the Commerce Clause).
16
145, 153-154 (1960) (citing Curtis's Administratrix v.
Fiedler, 2 Black 461, 479 (1863)) (distinguishing common-
law suit against the tax collector from action of assumpsit
for money had and received); George Moore Ice Cream Co. v.
Rose, 289 U.S. 373, 382-383 (1933); William T. Plumb, Jr.,
Tax Refund Suits Against Collectors of Internal Revenue, 60
HARV. L. REV. 685, 687 (1947) (describing collector suit as a
fiction solely designed to bring the Government into court).
In comparing the time limitation at issue in Irwin with the
time limitation at issue in this case, it is clear that were we
to apply the rule of equitable tolling to suits against the
government brought under section 7426(a)(1), it would
amount to a substantial broadening of the congressional
waiver. Therefore, the reasoning of the Irwin Court is
entirely unpersuasive with respect to section 6532(c). The
provision at bar is similar to the tax provision considered in
Brockamp and distinguishable from the Title VII limitation
considered in Irwin, reinforcing the conclusion that section
6532(c) cannot be equitably tolled.
2. The Structure of Section 6532(c)
Second, like the time limitation at issue in Brockamp, but
unlike the one at issue in Irwin, section 6532(c) "sets forth
its time limitation[] in unusually emphatic form." Brockamp,
519 U.S. at 305. While the time limitation at issue in Irwin
was permissive in nature, the time limitation at issue in
Brockamp and the time limitation at issue in this case are
not. Compare 42 U.S.C. S 2000e-16(c) (1990) ("[A]n
employee or applicant for employment, if aggrieved by the
final disposition of his complaint, or by the failure to take
final action on his complaint, may file a civil action as
provided in [42 U.S.C. S] 2000e-5.") (emphasis added) with
26 U.S.C. S 6511(b)(1) (1996) ("No credit or refund shall be
allowed or made after the expiration of the period of
limitation prescribed . . . unless a claim for . . . refund is
filed . . . within such period.") (emphasis added), and 26
U.S.C. S 6532(c)(1) (1996) ("No suit or proceeding . . . shall
be begun after the expiration of 9 months from the date of
the levy or agreement giving rise to such action.") (emphasis
added). Thus the emphatic, non-permissive nature of the
language in section 6532(c) also suggests that the time
limitation at issue cannot be equitably tolled.
17
Moreover, like the time limitation at issue in Brockamp,
but unlike the time limitation at issue in Irwin , section
6532(c) "sets forth explicit exceptions to its basic time
limit[], and those very specific exceptions do not include
equitable tolling." Brockamp, 519 U.S. at 251. Section
6511(d) establishes special time limit rules for refunds
related to operating losses, credit carrybacks, foreign taxes,
self-employment taxes, worthless securities, and bad debts.
See 26 U.S.C. S 6511(d) (1996). Similarly, section 6532(c)(2)
states that
[i]f a request is made for the return of property
described in section 6343(b), the 9-month period
prescribed in [section 6532(c)(1)] shall be extended for
a period of 12 months from the date of filing of such
request or for a period of 6 months from the date of
mailing by registered or certified mail by the Secretary
to the person making such request of a notice of
disallowance of the part of the request to which the
action relates, whichever is shorter.
26 U.S.C. S 6532(c)(2) (1996). The existence of an explicit
exception in section 6532(c)(2) to the generally applicable
nine-month time limitation in section 6532(c)(1) further
suggests that the nine-month time limitation in section
6532(c)(1) cannot be equitably tolled. Moreover, both the
time limitation at issue in Brockamp and the time limitation
at issue in this case are provisions of the Internal Revenue
Code set forth at Title 26, Subtitle F, Chapter 66, entitled
"Limitations." See 26 U.S.C. SS 6511, 6532(c) (1996); see
also Brockamp, 519 U.S. at 352 ("Tax law, after all, is not
normally characterized by case-specific exceptions reflecting
individualized equities.").
3. The Underlying Subject Matter
Finally, like the time limitation at issue in Brockamp,
"[t]he nature of the underlying subject matter--tax
collection--underscores the linguistic point." Brockamp,
519 U.S. at 352. In light of the "more than 200 million tax
returns" and "90 million refunds" that the IRS processes
annually, the Brockamp Court was clearly concerned about
the administrative burden the IRS would face if the Court
permitted section 6511 to be equitably tolled. Id. While
18
wrongful levy claims undoubtedly compose a much smaller
subset of taxpayer suits brought against the IRS than do
claims for "credit or refund of an overpayment of any tax
imposed by" the IRS,15 equitably tolling the time limitation
in section 6532(c) could nevertheless pose serious
administrative problems because anyone, not just the
taxpayer in question, can bring a wrongful levy suit against
the IRS. 26 U.S.C. S 6511(a) (1996); see Brockamp, 519
U.S. at 352 ("The nature and potential magnitude of the
administrative problem suggest that Congress decided to
pay the price of occasional unfairness in individual cases
(penalizing a taxpayer whose claim is unavoidably delayed)
in order to maintain a more workable tax enforcement
system."). Compare 26 U.S.C. S 7422 (creating a cause of
action for taxpayers seeking a refund from the IRS)
(emphasis added), with 26 U.S.C. S 7426 ("If a levy has
been made on property or property has been sold pursuant
to a levy, any person (other than the person against whom
is assessed the tax out of which such levy arose) who
claims an interest in or lien on such property and that
such property was wrongfully levied upon may bring a civil
action against the United States in a district court of the
United States.") (emphasis added).
Holding that section 6532(c) can be equitably tolled could
open the floodgates to countless suits brought under
section 7426 against the government by various third-party
creditors laying claim to assets seized by the IRS many
years after the expiration of the time limitation set forth in
section 6532(c). Cf. Brockamp, 519 U.S. at 352. Thus, the
potential for administrative problems alluded to by the
Brockamp Court is arguably at least as, if not more acute
in our case than in Brockamp because equitable tolling
could lead to myriad, stale wrongful levy claims by various
third parties. Cf. id. at 352-353.
In addition to potential administrative problems
associated with countless wrongful levy suits brought
against the IRS, we are mindful of the IRS's need for
_________________________________________________________________
15. The time limitation at issue in Brockamp , set forth in section 6511,
applies to claims for "credit or refund of an overpayment of any tax
imposed by" the IRS. 26 U.S.C. S 6511(a) (1996).
19
certainty and finality when imposing a levy on the assets of
a delinquent taxpayer. We also acknowledge that third
parties with an interest in assets owned by delinquent
taxpayers should be able to sue the IRS if it wrongfully
imposes a levy on those assets. Nevertheless, in situations
where the IRS imposes a levy on the assets of a delinquent
taxpayer, only to discover that another party has a superior
claim to the assets, the IRS will be forced to seek other
assets to satisfy the tax liability in question. Were we to
hold that section 6532(c) can be equitably tolled, we would
delay the final disposition of competing claims in cases like
this one and would jeopardize, perhaps even destroy, the
IRS's ability to impose a levy on other assets owned by a
delinquent taxpayer. Such an outcome is not only at odds
with purpose behind 26 U.S.C. S 7426, but also the thrust
of the Supreme Court's holding in Brockamp. See
Brockamp, 519 U.S. at 352.16
D. Other Courts' Analysis of Equitable Tolling and
Section 6532
Although the issue of whether the time limitation in
section 6532(c) is a statute of limitations, which can be
equitably tolled, or a jurisdictional bar, which cannot be
_________________________________________________________________
16. Like the time limitation at issue in Irwin, but unlike the time
limitation at issue in Brockamp, section 6532(c) uses "fairly simple
language," rather than "highly detailed,""technical" language. Brockamp,
519 U.S. 350. Viewed in isolation, this fact suggests that like the time
limitation at issue in Irwin, section 6532(c) can be equitably tolled.
However, when the "fairly simple language" of section 6532(c) is
considered in the context of the other facts discussed above, all of which
indicate that Congress did not intend for section 6532(c) to be equitably
tolled, it seems fairly clear that section 6532(c) cannot be equitably
tolled. A holding to the contrary would be tantamount to concluding that
if Congress were not to "set forth [] time limitations in a highly
detailed
technical matter," id., all time limitations applicable to lawsuits
against
the government, which are, as a matter of law, "condition[s] to the waiver
of sovereign immunity," could be equitably tolled. Irwin, 498 U.S. at 94.
Such a conclusion is untenable and is at odds with the Irwin Court's
acknowledgment that statutes that are "a condition to the waiver of
sovereign immunity must be strictly construed." Id.; see also, e.g., Lane
v. Pena, 518 U.S. 187, 192 (1996) ("[A] waiver of the Government's
sovereign immunity will be strictly construed, in terms of its scope, in
favor of the sovereign.").
20
equitably tolled, is one of first impression in our circuit,
four of our sister circuits have addressed this issue since
the Supreme Court's holding in Irwin, with three of these
circuits concluding that the time limitation set forth in
section 6532(c) is a jurisdictional bar.17 The Second,
Seventh, and Eighth Circuits have each concluded that
section 7426(a)(1) is the exclusive remedy available to third
parties asserting claims to property levied by the IRS and
that the failure to file a timely claim as required by section
6532(c) deprives a federal district court of subject matter
jurisdiction. See Miller v. Tony & Susan Alamo Found., 134
F.3d 910, 916 (8th Cir. 1998) ("The Millers do not dispute
they failed to assert a timely S 7426(a)(1) wrongful levy
claim on the Fort Smith/Nashville property, [and t]hus, the
Millers' claim to the Fort Smith/Nashville property is
outside the subject-matter jurisdiction of the district
court."); Amwest Sur. Ins. Co. v. United States, 28 F.3d 690,
691 (7th Cir. 1994) (affirming the district court's dismissal
of a wrongful levy action, untimely under section 6532(c),
for lack of subject matter jurisdiction); Williams v. United
States, 947 F.2d 37, 40 (2d Cir. 1991) (same). Several
district courts have also held that section 6532(c) acts not
as a statute of limitations but as a jurisdictional bar. See
Compagnoni v. United States, No. 94-0813-CIV-MARCUS,
1997 WL 416482, at *3 (S.D. Fla. May 13, 1997) (denying
a motion for reconsideration of the district court's earlier
order dismissing a wrongful levy claim, untimely under
section 6532(c), for lack of subject matter jurisdiction), aff'd
on other grounds, 173 F.3d 1369 (11th Cir. 1999); Fanning
v. United States, No. 1:95-CV-222-RCF, 1996 WL 343462,
at *2 (N.D. Ga. Apr. 30, 1996) ("As the government points
out, the statute of limitations set forth in I.R.C.S 6532(c)
`acts not only as an affirmative defense, but also as a
_________________________________________________________________
17. Ninth Circuit opinions on this issue are inconsistent. Compare
Maraziti v. Thorpe, 52 F.3d 252, 255 (9th Cir. 1995) (Hawkins, J.)
(affirming the District Court's dismissal of a section 7426(a)(1) claim,
untimely under section 6532(c), for lack of subject matter jurisdiction)
with Supermail Cargo, Inc. v. United States, 68 F.3d 1204 1206 n.2 (9th
Cir. 1995) (Reinhardt, J.) ("The district court erroneously believed the
statute of limitations contained in S 26 U.S.C. 6532(c)(1) to be a
jurisdictional prerequisite and, accordingly, dismissed under Rule
12(b)(1) for lack of subject matter jurisdiction.").
21
restriction of the district court's subject matter jurisdiction
over an action that is untimely filed.' ") (citations omitted),
aff'd mem., 117 F.3d 1432 (11th Cir. 1997); Hanna Coal
Co., Inc. v. Internal Revenue Service, No. CIV.A.92-0071-B,
1994 WL 666928, at *1 (W.D. Va. Oct. 12, 1994)
("Therefore, if the statute of limitations espoused in 26
U.S.C. S 6532(c) has expired, then the United States' limited
consent to be sued has also expired and this Court would
not have proper subject matter jurisdiction over this
matter."), vacated on other grounds, 1994 WL 762188, at *1
(W.D. Va. Nov. 18, 1994). But cf. Gothenburg State Bank &
Trust Co. v. United States, No. 7:98CV5026, 1999 WL
314928, at *2 (D. Neb. Apr. 9, 1999) (stating without
explanation that "failure to file a timely wrongful levy claim
deprives the court of subject matter jurisdiction" but
holding that section 6532(c) can be equitably tolled). Thus,
the vast majority of federal courts to address squarely this
issue have concluded that the time limitation in section
6532(c) is a jurisdictional bar that cannot be tolled,
regardless of the equities in a given case, and that the
failure to file a claim under section 7426(a)(1) prior to the
expiration of the time limitation in section 6532(c) deprives
the district court of subject matter jurisdiction.
Reinforcing the conclusion that a district court lacks
subject matter jurisdiction to entertain a wrongful levy
action that is untimely under section 6532(c) are decisions
in four sister circuits holding that the failure tofile a timely
claim as required by section 6532(a)18 deprives a federal
court of subject matter jurisdiction. See RHI Holdings, Inc.
v. United States, 142 F.3d 1459, 1461-63 (Fed. Cir. 1998)
(holding that a taxpayer's failure to file a timely claim
pursuant to section 6532(a) deprives the court of subject
matter jurisdiction); Marcinkowsky v. United States, 206
F.3d 1419, 1421-22 (Fed. Cir. 2000) (same); Bartley v.
United States, 123 F.3d 466, 471-72 (7th Cir. 1997) (stating
that unless the taxpayer files a timely claim under section
6532(a), "a court lacks subject matter jurisdiction over a
suit for refund"); Miller v. United States , No. 96-2787, 1997
_________________________________________________________________
18. Section 6532(a) governs claims "under section 7422(a) for the
recovery of any internal revenue tax, penalty, or other sum." 26 U.S.C.
S 6532(a) (1996).
22
WL 381958, at *1-*2 (4th Cir. July 11, 1997) (unpublished
opinion) ("Miller appeals from the district court's order
dismissing his tax refund suit for lack of subject matter
jurisdiction because he failed to file his suit within the two-
year statute of limitations provided by I.R.C. S 6532(a)[; w]e
affirm."); Oatman v. Department of Treasury-Internal
Revenue Service, 34 F.3d 787, 789 (9th Cir. 1994) ("The
district court lacks jurisdiction over claims for refunds
pressed by any potential class members who have not
satisfied the procedural requirements of 26 U.S.C.SS 6532
and 7422."). While 26 U.S.C. S 6532(c) is less detailed and
less complex than 26 U.S.C. S 6532(a),19 in all other
relevant respects, 26 U.S.C. S 6532(c) is more like 26 U.S.C.
_________________________________________________________________
19. Section 6523(a) states:
(a) Suits by taxpayers for refund.--
(1) General rule.--No suit or proceeding under section 7422(a) for
the recovery of any internal revenue tax, penalty, or other sum,
shall be begun before the expiration of 6 months from the date of
filing the claim required under such section unless the Secretary
renders a decision thereon within that time, nor after the
expiration of 2 years from the date of mailing by certified mail or
registered mail by the Secretary to the taxpayer of a notice of the
disallowance of the part of the claim to which the suit or
proceeding relates.
(2) Extension of time.--The 2-year period prescribed in paragraph
(1) shall be extended for such period as may be agreed upon in
writing between the taxpayer and the Secretary.
(3) Waiver of notice of disallowance.--If any person files a
written
waiver of the requirement that he be mailed a notice of
disallowance, the 2-year period prescribed in paragraph (1) shall
begin on the date such waiver is filed.
(4) Reconsideration after mailing of notice.--Any consideration,
reconsideration, or action by the Secretary with respect to such
claim following the mailing of a notice by certified mail or
registered mail of disallowance shall not operate to extend the
period within which suit may be begun.
(5) Cross reference.--For substitution of 120-day period for the 6-
month period contained in paragraph (1) in a title 11 case, see
section 505(a)(2) of title 11 of the United States Code.
26 U.S.C. S 6532(a) (1986).
23
S 6532(a) than 42 U.S.C. S 2000e-16(c). Like section
6532(a), section 6532(c) applies only to suits brought
against the government, sets forth its time limitations in
unusually emphatic form, sets forth explicit exceptions to
its basic time limitations (exceptions which do not include
equitable tolling), and is a provision of the Internal Revenue
Code set forth in Title 26, Subtitle F, Chapter 66, section
6532, entitled "Periods of limitations on suits." Moreover,
like section 6532(a), were section 6532(c) equitably tolled,
the IRS could be forced to litigate countless, stale claims,
thus creating "serious administrative problems." These
similarities suggest that like the time limitation set forth in
section 6532(a), the time limitation set forth in section
6532(c) cannot be equitably tolled.
For the foregoing reasons, we conclude that a careful
reading of Irwin and Brockamp leads ineluctably to the
conclusion that Congress did not intend for the time
limitation in section 6532(c) to be equitably tolled.
Consistent with opinions in our sister circuits, we hold that
the failure to file a timely wrongful levy claim prior to the
expiration of the time limitation in section 6532(c) deprives
the district court of subject matter jurisdiction. Cf. Irwin,
498 U.S. at 91 ("We granted certiorari to determine when
the 30-day period under S 2000e-16(c) begins to run and to
resolve the Circuit conflict over whether late-filed claims are
jurisdictionally barred."); Perez v. United States, 167 F.3d
913, 915-18 (5th Cir. 1999) (noting that the Brockamp
Court concluded that section 6511 was a jurisdictional time
limitation that could not be equitably tolled); RHI Holdings,
Inc. v. United States, 142 F.3d 1459, 1461-63 (Fed. Cir.
1998) (holding that like the time limitation in Brockamp, a
taxpayer's failure to file an timely claim pursuant to section
6532(a) deprives the court of subject matter jurisdiction);
Calderon v. United States District Court for the Central
District of California, 128 F.3d 1283, 1288 n.4 (9th Cir.
1997) ("In [United States v. ]Brockamp , the [Supreme] Court
held that a time-limit on filing tax refund claims was a
jurisdictional bar, not a tollable statute of limitations.").
IV. CONCLUSION
Because BDC's claim, brought pursuant to section
7426(a)(1), was filed after the time limitation set forth in
24
section 6532(c) had expired, and because the time
limitation set forth in section 6532(c) is a jurisdictional bar,
which cannot be equitably tolled, we will remand the case
to the District Court with instructions to dismiss the case
for lack of subject matter jurisdiction.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
25