Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_06-cv-01630/USCOURTS-caed-1_06-cv-01630-7/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 26:7403 Suit to Enforce Federal Tax Lien

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, )

 )

Plaintiff, )

v. )

)

CHARLES WAYNE UPTERGROVE, )

ET AL., )

Defendants. )

____________________________________)

1: 06 - CV - 1630 - AWI - GSA

MEMORANDUM OPINION AND

ORDER DENYING

DEFENDANTS’ MOTION TO

DISMISS

(Documents #65 and #67)

BACKGROUND

On November 14, 2006, Plaintiff the United States of America filed this complaint to

reduce federal tax assessments to judgments and foreclose on property. Plaintiff asks that the

court enter judgment against Martha G. F. Uptergrove in the amount of $200,802.70, plus

statutory interest and other additions allowed by law, for unpaid federal employment taxes and

penalties for the periods ending March 31, 2001, through March 31, 2002. Plaintiff asks that the

court enter judgment against Charles W. Uptergrove in the amount of $336,298,70, plus statutory

interest and other additions allowed by law, for the unpaid Trust Fund Recovery Penalty for the

periods ending March 31, 1988, through and including June 30, 1989. Plaintiff asks that the

court find the United States has valid and subsisting lien and rights on property belonging to

Charles W. Uptergrove and Martha G. F. Uptergrove. Finally, Plaintiff asks that the court allow

the federal tax liens against Defendants be foreclosed upon, that real property be ordered sold,

and that the proceeds from such sale be distributed in accordance with the court's findings as to

the validity and priority of the liens and claims of all parties.

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On October 31, 2007, Defendants filed a motion to dismiss the complaint for lack of

legislative jurisdiction. Defendants contend that there is no federal legislative jurisdiction over

Defendants. Defendants contend that to the extent United States v. Butler, 297 U.S. 1 (1936),

provides for the power to tax, this case is unconstitutional, and the Constitution excludes a

central federal government’s ability to directly tax. Defendants also contend that Plaintiff has

never obtained the required authorization under 26 U.S.C. § 7401 to prosecute these Defendants. 

On November 11, 2007, Plaintiff filed an opposition. Plaintiff contends that this court

has jurisdiction pursuant to 28 U.S.C. §§ 1340 & 1345 and 26 U.S.C. § 7401, 7402, & 7403. 

To the extent Defendants contend Plaintiff never obtained the required authorization, Plaintiff

provides a letter authorizing this suit. To the extend Defendant contend United States v. Butler,

297 U.S. 1 (1936), was wrongly decided, Plaintiff argues that this court is bound to this seventyyear old precedent.

ALLEGED FACTS

The complaint alleges that Defendants Charles W. Uptergrove and Martha G. F.

Uptergrove own real property located at 26662 Road 23, Chowchilla, California, 93613. 

The complaint alleges that a delegate of the Secretary of the Treasury made assessments

against Martha G. F. Uptergrove relating to a sole proprietorship called IKON Roofing Company

for unpaid federal employment taxes, penalties, interest, and other statutory additions. The

complaint alleges that Martha G. F. Uptergrove has neglected or refused to fully pay these

assessments, which remain due and owing as of June 14, 2006 with an unpaid balance of

$200,802.70, plus statutory interest and other additions allowed by law. 

The complaint alleges that on March 18, 1996, a delegate of the Secretary of the Treasury

made assessments against Charles W. Uptergrove for a Trust Fund Recovery Penalty, including

interest and other statutory additions, as a result of the willful failure of Charles W. Uptergrove

as a person responsible to collect, truthfully account for and pay over the withheld income and

FICA taxes of Uptergrove Group, Inc., dba Uptergrove Roofing Company, for the periods ending

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March 31, 1988, through and including June 30, 1989. The complaint alleges that Charles W.

Uptergrove has neglected or refused to fully pay those assessments which remain due and owing

as of September 11, 2006, in the amount of $341,656.64, plus interest and other additions

according to law.

The complaint alleges that pursuant to 26 U.S.C. § 6321 and § 6322, liens arose in favor

of the United States on the dates of the assessments. The complaint alleges that on April 3,

2003, a delegate of the Secretary of Treasury recorded in the County Recorder’s Office for

Madera County, California, Notice of a Federal Tax Lien against Martha G. F. Uptergrove for

unpaid federal employment taxes. The complaint alleges that on April 9, 1997, a delegate of the

Secretary of Treasury recorded in the County Recorder’s Office for Madera County, California, a

Notice of Federal Tax Lien against Charles W. Uptergrove for the unpaid Trust Fund Recovery

Penalty Assessments. 

LEGAL STANDARD

Defendants contend that this court is without legislative jurisdiction over this action. No

Federal Rule of Civil Procedure allows dismissal for lack of legislative jurisdiction. In the

interests of justice, the court will construe this motion as a motion to dismiss for lack of subject

matter jurisdiction. 

Rule 12(b)(1) of the Federal Rules of Civil Procedure allows a motion to dismiss for lack

of subject matter jurisdiction. It is a fundamental precept that federal courts are courts of limited

jurisdiction. Limits upon federal jurisdiction must not be disregarded or evaded. Owen

Equipment & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). The plaintiff has the burden to

establish that subject matter jurisdiction is proper. Kokkonen v. Guardian Life Ins. Co., 511 U.S.

375, 377 (1994). This burden, at the pleading stage, must be met by pleading sufficient

allegations to show a proper basis for the court to assert subject matter jurisdiction over the

action. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Fed. R. Civ. P.

8(a)(1). A defendant may attack the existence of subject matter jurisdiction based on the

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complaint’s allegations or by submitted evidence apart from the pleadings. White v. Lee, 227

F.3d 1214, 1242 (9 Cir. 2000); Thornhill Publishing Co. v. General Telephone Electronics, th

594 F.2d 730, 733 (9 Cir. 1979); Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F. 2d 884, th

891 (3d Cir.1977). If the moving party presents affidavits or other evidence concerning

jurisdiction, the party opposing the motion must furnish affidavits or other evidence necessary to

satisfy its burden of establishing subject matter jurisdiction. Savage v. Glendale Union High

School, Dist. No. 205, Maricopa County, 343 F.3d 1036, 1040 n.2 (9 Cir. 2003); La Reunion th

Francaise SA v. Barnes, 247 F.3d 1022, 1026 n.2 (9 2001); St. Clair v. City of Chico, 880 th

F.2d 199, 201 (9 Cir. 1989). In a factual attack to jurisdiction, the court may rely on evidence

th

extrinsic to the pleadings and resolve factual disputes relating to jurisdiction. St. Clair, 880 F. 2d

199, 201 (9 Cir.1989). th

DISCUSSION

A. Ability of Federal Government to Tax

Plaintiffs contend that the Framers’ intent at the time the Constitution was written was to

not allow any central federal government to tax. Plaintiffs contend that to the extent United

States v. Butler, 297 U.S. 1 (1936) allows such taxation, this case is unconstitutional. This

court has no choice but to follow Butler, in which the United States Supreme Court found that

the United States has the power to tax. Id. at 66. 

B. Jurisdiction Over this Action

This court has jurisdiction over this action pursuant to 28 U.S.C. § 1340, which allows

jurisdiction over any civil action arising under any Act of Congress providing for internal

revenue, and 28 U.S.C. § 1345, which allows for jurisdiction over suits commenced by the

United States. Because this action is brought by the United States and concerns a tax liability,

this court has jurisdiction.

 Title 26 of the United States Code puts some limits on the United States’ ability to file

suits concerning taxes. Title 26 U.S.C. § 7401 provides:

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No civil action for the collection or recovery of taxes, or of any fine, penalty, or

forfeiture, shall be commenced unless the Secretary authorizes or sanctions the

proceedings and the Attorney General or his delegate directs that the action be

commenced.

28 U.S.C. § 7401. Defendants contend that Plaintiff does not have the required authority to

prosecute this action pursuant to Section 7401. In a motion attacking jurisdiction, the court may

look to evidence outside the record. Plaintiff has provided a copy of the letter authorizing this

suit under Section 7401 as Exhibit 1 to the Declaration of G. Patrick Jennings. In light of this

evidence, Plaintiff has complied with the applicable procedural requirements found in Section

7401. 

CONCLUSION AND ORDER

In light of the above memorandum opinion and order, the court ORDERS that

Defendants’ motion to dismiss is DENIED.

IT IS SO ORDERED.

Dated: December 6, 2007 /s/ Anthony W. Ishii 

0m8i78 UNITED STATES DISTRICT JUDGE

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