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Hunter v. United States

United States District Court, E.D. Michigan, Southern Division

April 30, 2018

Charles Hunter, Plaintiff,
v.
United States of America, et al., Defendants.

          U.S. Magistrate Judge Stephanie Dawkins Davis

          ORDER GRANTING DEFENDANTS' MOTION TO DISMISS [8]

          Arthur J. Tarnow, Senior United States District Judge

         On October 26, 2017, Plaintiff Charles Hunter filed this action to quiet title pursuant to 28 U.S.C. § 2410(a)(1). Defendants, the Government and Sterling Mortgage and Investment Co. (“Sterling”), filed the instant Motion to Dismiss [8] for lack of subject matter jurisdiction on December 7, 2017. Plaintiff filed a Response [10] on December 26, 2017. Defendants filed a Reply [11] on January 9, 2018. On April 10, 2018, the Court held a hearing on the Motion.

         Because Plaintiff no longer has a cognizable legal interest in the subject property, he lacks standing to bring this action under § 2410(a)(1). Without a waiver of the Government's sovereign immunity, the Court does not have subject matter jurisdiction over this case. For the reasons explained below, the Court GRANTS Defendants' Motion to Dismiss [8].

         Factual Background

          On September 30, 1999, Plaintiff received a warranty deed for a residential property located at 1152 Lakeside Drive in Birmingham, Michigan (“Lakeside Property”). On October 21, 2004, Plaintiff executed a mortgage with Wells Fargo on the Lakeside Property.

         From 2006 to 2011, Plaintiff failed to pay his federal taxes. In 2013 and 2015, the Internal Revenue Service (“IRS”) recorded multiple liens on the Lakeside Property for Plaintiff's unpaid federal taxes.

         Plaintiff also defaulted on his mortgage. On April 11, 2017, Wells Fargo executed a non-judicial foreclosure sale on the Lakeside Property. Wells Fargo attempted to notify the IRS via certified mail of the sale on March 16, 2017, but inadvertently sent the notification to the wrong address.

         At the foreclosure sale, Defendant Sterling purchased the Lakeside Property for $420, 235.82. However, because the IRS did not receive proper notice of the sale, the liens arising from Plaintiff's tax liabilities remained on the Lakeside Property after the sale to Defendant Sterling.

         On July 12, 2017, the Government brought an action in this Court against Sterling and Mr. Hunter to enforce its tax liens on the Lakeside Property. United States v. Sterling Mortgage & Investment Co., et al., No. 2:17-cv-12281 (E.D. Mich. 2017) (“Sterling case”). At the time the Government filed the Sterling case, Mr. Hunter's statutory right to redeem the Lakeside Property had not yet expired.

         On September 18, 2017, the Government and Sterling settled the Sterling case. According to the settlement agreement, Sterling agreed to “sell the Lakeside Property and provide the Government with 50-percent of the ‘net profits' from the sale.” [Dkt. #8 at 7]. The Government agreed to “apply those funds to Mr. Hunter's unpaid federal tax debts.” Id. Mr. Hunter was not part of settlement negotiations or the ultimate agreement.

         On October 11, 2017, Plaintiff's redemption period on the Lakeside Property expired.

         On October 26, 2017, Plaintiff filed this action pursuant to § 2410(a)(1). He asks the Court to enter a declaratory judgment requiring the Government to enforce its federal tax liens on the Lakeside Property over any interest of Defendant Sterling.

         Standard ...


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