*

The Honorable Ann Aldrich, United States District Judge for the

Northern District of Ohio, sitting by designation.

1

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

ELECTRONIC CITATION: 2004 FED App. 0244P (6th Cir.)

File Name: 04a0244p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

_________________

GRABLE & SONS METAL

PRODUCTS, INC.,

Plaintiff-Appellant,

v.

DARUE ENGINEERING &

MANUFACTURING,

Defendant-Appellee.

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No. 02-1678

Appeal from the United States District Court

for the Western District of Michigan at Grand Rapids.

No. 01-00037—David W. McKeague, District Judge.

Argued: March 9, 2004

Decided and Filed: July 27, 2004 

Before: BOGGS, Chief Judge; DAUGHTREY, Circuit

Judge; and ALDRICH, District Judge.*

2 Grable & Sons Metal Products

v. Darue Engineering

No. 02-1678

_________________

COUNSEL

ARGUED: Charles E. McFarland, Campbellsburg,

Kentucky, for Appellant. Michael C. Walton, RHOADES,

McKEE, BOER, GOODRICH & TITTA, Grand Rapids,

Michigan, for Appellee. ON BRIEF: Charles E. McFarland,

Campbellsburg, Kentucky, for Appellant. Michael C.

Walton, RHOADES, McKEE, BOER, GOODRICH &

TITTA, Grand Rapids, Michigan, for Appellee.

_________________

OPINION

_________________

BOGGS, Chief Judge. Grable & Sons Metal Products Inc.,

(“Grable”) argues that the district court committed two errors

in granting judgment to Darue Engineering & Manufacturing

(“Darue”) in Grable’s action to quiet title against Darue.

First, Grable argues that its claim, although based on federal

tax law, does not present a federal question, and, therefore,

that the district court did not have subject matter jurisdiction

to adjudicate the case after Darue removed it from Michigan

state court. Secondly, Grable appeals the district court’s

judgment denying its quiet-title claim in property Darue had

purchased at a tax sale after the IRS seized it from Grable in

1994. 

Grable’s quiet-title action is based on provisions of the

Internal Revenue Code concerning proper procedures for

notifying delinquent taxpayers that their property has been

seized. Its claim implicates a substantial federal interest,

thereby presenting a federal question. Furthermore, the

district court correctly denied Grable’s action because the

Internal Revenue Code allows for substantial, rather than

literal, compliance with regulations regarding tax-seizure
No. 02-1678 Grable & Sons Metal Products v. Darue

Engineering

3

notification. Neither federal law nor principles of equity

supports Grable’s claim, asserted six years after the sale of its

property, that notice by certified mail, rather than in person,

rendered the IRS sale to Darue invalid. Accordingly, we

affirm the judgment of the district court in its entirety. 

I

The facts in this case are not disputed. In 1994, the IRS

seized property at 601-701 W. Plains Road, in Eaton Rapids,

Michigan, to satisfy Grable’s tax debt resulting from not

paying its corporate income taxes for six years. The IRS

served notice of the seizure by certified mail, although 26

U.S.C. § 6335(a), the relevant statute, provides that notice

must be “given” personally to the owner of the property. The

parties agree that the IRS failed to adhere to the exact

provisions of the statute but that Grable nevertheless received

actual notice of the seizure. The IRS sold the property to

Darue on December 13, 1994, for $44,500. The record before

us contains no clear evidence that Grable challenged the sale

at the time or attempted to redeem the property at issue in this

case. Following its standard procedure, the IRS executed a

quitclaim deed to Darue on November 13, 1995. 

 On December 14, 2000, about six years after Darue bought

the property, Grable challenged the sale in Eaton County

Circuit Court by filing a quiet-title action. Darue removed the

case to the United States Court for the Western District of

Michigan under 28 U.S.C. § 1441(b). Grable filed a motion

to remand based on lack of subject matter jurisdiction.

28 U.S.C. § 1447(c). The district court held that it had

jurisdiction to hear the case because the application of

§ 6335(a) implicates a substantial federal interest, meaning

that Grable’s claim was based on a federal question. On

March 29, 2002, the district court denied Grable’s motion to

quiet title and awarded judgment to Darue. Grable appealed

to this court in a timely manner.

4 Grable & Sons Metal Products

v. Darue Engineering

No. 02-1678

1

In order to be a party to a quiet title action, the United States must

have an interest in the property, which it no longer has in this case. 28

U.S.C. § 2410(a). 

II

Federal Question Jurisdiction

A defendant may remove to federal district court “any civil

action brought in a state court of which the district courts of

the United States have original jurisdiction.” 28 U.S.C.

§ 1441(a). District courts have original jurisdiction over any

civil action “arising under any Act of Congress providing for

internal revenue . . . .” 28 U.S.C. § 1340. This court reviews

district court decisions regarding subject matter jurisdiction

de novo. Caudill v. N. Am. Media Corp., 200 F.3d 914, 916

(6th Cir. 2000). Because we may not rule on the merits of a

case over which a district court did not have subject matter

jurisdiction, we must decide that issue first. See Thomas v.

United States, 166 F.3d 825, 828 (6th Cir. 1999). The parties

do not have diversity of citizenship, 28 U.S.C. § 1332(a), nor

is the United States a party to this action.1 

Federal courts also have original jurisdiction over claims

“arising under the Constitution, laws, or treaties of the United

States.” 28 U.S.C. § 1331. Whether a claim presents a

federal question “must be determined from what necessarily

appears in the plaintiff’s statement of his own claim.” Taylor

v. Anderson, 234 U.S. 74, 75-76 (1914). In its original

complaint to quiet title, Grable alleged that Darue’s quitclaim

deed was invalid because it “was given with improper notice

pursuant to 26 U.S.C. § 6331 et seq. . . . [and] since the tax

deed was given pursuant to improper notice as required by 26

U.S.C. § 6335(a), said transfer and claim through the tax deed

is null and void and void ab initio.” The key question is

whether Grable’s quiet-title action, based as it is on the faulty
No. 02-1678 Grable & Sons Metal Products v. Darue

Engineering

5

process in a tax seizure, “arises under” federal law and thus

invokes federal court jurisdiction. We hold that it does.

The statute upon which Grable bases his complaint reads:

As soon as practicable after seizure of property, notice in

writing shall be given by the Secretary to the owner of

the property . . . or shall be left at his usual place of

abode or business if he has such within the internal

revenue district where the seizure is made. If the owner

cannot be readily located, or has no dwelling or place of

business within such district, the notice may be mailed to

his last known address.

26 U.S.C. § 6335(a) (emphasis added). The parties agree that

the IRS failed to “give” or “leave” notification and that

therefore the service of notice did not comply with the statute.

See Goodwin v. United States, 935 F.2d 1061, 1064 (1991)

(noting government concession that the literal meaning of the

statute requires personal service); Howard v. Adle, 538 F.

Supp. 504, 507 (E.D. Mich. 1982) (demonstrating that

certified mailing is insufficient for compliance with the

statute by quoting 26 C.F.R. § 301.6335-1(b)(1)(1981) and

IRS Manual § 5356.1(2)(1980); the latter specifies that the

“original notice of sale will be delivered to the taxpayer

personally”). Although Grable’s complaint hinges on a

violation of the Internal Revenue Code, Grable insists that its

cause of action does not arise under federal law.

The long history of Supreme Court guidance concerning the

meaning of “arising under” the laws of the United States has

been synthesized into a three-part test. Although

formulations differ slightly among the circuits, a federal

question may arise out of a state law case or controversy if the

plaintiff asserts a federal right that 1) involves a substantial

question of federal law; 2) is framed in terms of state law;

and 3) requires interpretation of federal law to resolve the

case. Long v. Bando Mfg. of America, 201 F.3d 754, 759

6 Grable & Sons Metal Products

v. Darue Engineering

No. 02-1678

(6th Cir. 2000); see e.g., Howery v. Allstate Insurance Co.,

243 F.3d 912, 918 (5th Cir.), cert. denied, 534 U.S. 993

(2001); Seinfeld v. Austen, 39 F.3d 761, 763 (7th Cir. 1994),

cert. denied sub nom. Abbott Labs v. Seinfeld, 514 U.S. 1126

(1995). The asserted federal right in this case, personal

notification of seizure of property as provided by IRS

regulations, fulfills these three requirements.

Substantial Federal Interest 

To identify a federal question, we must make “a pragmatic

assessment of the nature of the federal interest at stake,”

Howery, 243 F.3d at 917 (citing commentators), a simple task

in this context. The federal government cannot function

without effective tax collection. See United States v. Kimbell

Foods, 440 U.S. 715, 734 (1979) (citing McCulloch v.

Maryland, 17 U.S. (4 Wheat.) 316, 425, 428, 431 (1819)).

Society has a strong interest in clear rules for handling

delinquent taxpayers. The IRS must have transparent

procedures for seizing and selling property so that people will

be willing to purchase property at tax sales, allowing the IRS

to provide a predictable stream of tax revenue. Determining

the scope of the IRS’s authority to seize property to satisfy a

tax debt undoubtably implicates a substantial federal interest.

Presentation as a state law claim

Grable sued to quiet title, which is generally a state law

cause of action. However, the scope of a taxpayer’s right to

due process in the form of notice of the tax seizure and sale is

the essential element of this claim. Grable would not have

any cause of action, and Darue would have undisputed title to

the property, were it not for the technical notice requirements

of § 6335(a). Therefore the Internal Revenue Code, not state

property law, lies at the center of this dispute. The state and

federal claims are sufficiently entwined to allow us to find

that Grable has presented a federal question.
No. 02-1678 Grable & Sons Metal Products v. Darue

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7

Interpretation of the federal law required 

Disposition of all the aspects of this case, including those

related to the traditional state law property issues, turn on

construction of federal tax law. Both parties agree that the

only way to resolve the underlying controversy is to evaluate

whether § 6335(a), which mandates notice for IRS seizure of

property for non-payment of taxes in person, requires strict,

or merely substantial, compliance with its provisions to allow

the IRS deed to convey title. If strict compliance is necessary,

then Grable is entitled to get his property back because the

IRS did not comply with the letter of the statute. If

substantial compliance is sufficient, then further analysis and

weighing of the equities of the situation is required.

Therefore the final requirement is met: interpretation of the

federal tax code is necessary to resolve the state law issue. 

In sum, Grable’s quiet title action presents a federal

question because it is rooted in the Internal Revenue Code,

the correct interpretation of which represents a substantial

federal interest.

III

Action to Quiet Title

The district court also correctly granted summary judgment

to the appellee, Darue. At issue is whether serving notice

through a certified letter, which Grable in fact received,

constitutes sufficient compliance with the statute to make the

resulting quitclaim deed valid. Evaluating whether

substantial compliance is applicable is a question of law that

is reviewed de novo. In re Eagle-Picher Indus., Inc. 285

F.3d 522, 527 (6th Cir. 2002) (applying substantial

compliance analysis to notice requirements in a bankruptcy

case). However, the rule itself is an equitable doctrine, so that

a district court’s decision to apply it is reviewed for abuse of

discretion. Id. at 529. See Cleveland Newspaper Guild

8 Grable & Sons Metal Products

v. Darue Engineering

No. 02-1678

Local 1 v. Plain Dealer Pub. Co., 839 F.2d 1147, 1155 (6th

Cir. 1988).

The Internal Revenue Code states that:

b) Deed of real property.--In the case of the sale of real

property pursuant to section 6335 --

. . .

(2) Deed as conveyance of title.--If the proceedings of

the Secretary as set forth have been substantially in

accordance with the provisions of law, such deed shall be

considered and operate as a conveyance of all the right,

title, and interest the party delinquent had in and to the

real property thus sold at the time the lien of the United

States attached thereto.

26 U.S.C. § 6339(b)(2) (emphasis added). Therefore, if the

IRS substantially complied with the provisions of § 6335(a),

then the tax sale is valid. 

Grable counsels against reading the substantial compliance

provision of §6339(b)(2) as applying to § 6335(a) seizures, in

spite of the statutory language to the contrary, since doing so

would render the notice provisions “totally ineffective.”

Appellant Br. at 31. This argument is not persuasive. Grable

is correct that a basic rule of statutory construction mandates

that a court should read statutes as a whole and not interpret

one provision in a way that would render another meaningless

or superfluous. Beck v. Prupis, 529 U.S. 494, 506 (2000)

(calling the rule a “longstanding canon of statutory

construction”); Lake Cumberland Trust v. EPA, 954 F.2d

1218, 1222 (6th Cir. 1992).

Allowing substantial compliance does not undermine the

purpose of § 6335(a), nor make its provisions superfluous.

Should the IRS fail to adhere to the strict statutory notice
No. 02-1678 Grable & Sons Metal Products v. Darue

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9

provisions, it then has the burden of showing it substantially

complied with them. Proving that a recalcitrant taxpayer

actually received notice of a seizure or sale could be quite

difficult. No court would uphold a seizure without notice.

Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306,

313 (1950) (stating that “there can be no doubt that at a

minimum [the due process clause] require[s] that deprivation

of life, liberty or property by adjudication be preceded by

notice and opportunity for hearing appropriate to the nature of

the case”).

Ignoring the provisions of § 6335(a) puts the IRS at risk

that a court will find its alternative notification procedures

inadequate and invalidate the tax sale. Gauging how much

variation will be tolerated puts the IRS in very uncertain

territory. For instance, a simple public announcement of a tax

sale, as provided for in 26 U.S.C. § 6335(b), is

“constitutionally inadequate.” Verba v. Ohio Cas. Ins. Co.,

851 F.2d 811, 816 (6th Cir. 1988). Attempting twice to notify

the taxpayer in person of the public sale of his property, and

then sending a certified letter, which was returned, and a

regular letter, which was not, is insufficient notice to validate

the tax sale. Reece v. Scroggins, 506 F.2d 967, 969 (5th Cir.

1975). Nor will a court be swayed by the facts that taxpayer

received proper notice of the initial property seizure and

found out about the auction before the bidding began. Ibid.

Adjudication of substantial compliance cases is very factspecific, and the outcome is uncertain for the litigants. We do

not believe that the latitude allowed by § 6339(b)(2)

undermines the strong motivation for the IRS to follow the

letter of § 6335(a). Only by doing so can it ensure the

validity of its tax sales, effectively collect back taxes, and

avoid litigation. 

The Third Circuit approved the application of the

substantial compliance doctrine to §6335(a) in Kabakjian v.

United States, 267 F.3d 208, 213 (2001), a case that is

directly on point, and upon which the district court relied.

10 Grable & Sons Metal Products

v. Darue Engineering

No. 02-1678

Like Grable, Kabakjian owed the IRS taxes, and his property

was seized and sold at auction. He sued the government,

claiming that the notices he received pursuant to § 6335(a)

were defective because he received them by certified mail,

rather than personal delivery. The Third Circuit held that the

notices “were not so defective as to void the seizure of

property and its transfer to third parties” because § 6339(b)(2)

allowed for substantial compliance. Ibid. Because Kabakjian

could not demonstrate any prejudice beyond a theoretical

deprivation of his right to notice, the court ruled that all his

property rights had transferred to a third party, and his claim

failed on the merits. Ibid.

Protecting the interests of bona fide purchasers is an

important aspect of quiet title analysis. In the one opportunity

the Sixth Circuit has had to address the question of substantial

compliance in the context of a tax seizure and sale, we too

held that procedural irregularities could not void a tax sale.

PM Group Inv. Corp. v. PYK Enter., No. 97-1335, 1998 WL

242337, at **3 (6th Cir. May 8, 1998) (unpublished opinion)

(holding that issuance of a certificate of sale was conclusive

evidence of the regularity of the sale). We noted that

§ 6339(b)(2) was enacted to protect bona fide purchasers,

such as Darue in this case. Ibid. (citing United States v.

Whiting Pools, 462 U.S. 198, 211 (1983)).

Grable argues that “provisions of law” in § 6339(b)(2)

means provisions of state law, citing Fuentes v. United

States, 14 Cl. Ct. 157, 167 (1987), and, therefore, that strict

adherence to the statute is required. Fuentes dealt with a

homeowner’s suit against the IRS for delivering a quitclaim

deed that was invalid under Puerto Rican law. The Court of

Claims noted “that a sharp focus must be placed on the

distinction between the law applicable to the efficacy of a tax

sale and the law applicable to the execution of a deed

stemming therefrom. As to the former, we find that federal

law is applicable; and as to the latter, local law governs.” Id.

at 166. This case deals with the efficacy of the tax sale, rather
No. 02-1678 Grable & Sons Metal Products v. Darue

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2

See Robert Kratovil, Real Estate Law 49 (6th ed. 1974) (explaining

that a “quitclaim deed purports to convey only the grantor's present

interest in the land, if any, rather than the land itself . . . . If he has no

interest, none will be conveyed.”) (Emphasis in original.)

than the validity of the deed,2 and is thus a question of federal

law. See also Reece, 506 F.2d at 970 (holding that faulty

notice provisions made the sale voidable ab initio) (emphasis

added). We also adopt the district court’s analysis rejecting

Grable’s reading of Fuentes. The district court correctly

pointed out that the substantial compliance language of

§ 6339(b)(2) does not refer to the execution of the deed, but

rather to the proceedings by which the Secretary sells real

property pursuant to § 6335, and therefore the statute directly

contradicts Grable’s theory that the substantial compliance

provisions only apply to state law. Grable & Sons Metal

Products, Inc. v. Darue Engineering & Mfg., 207 F. Supp. 2d

694, 697 (W.D. Mich. 2002) (emphasis in the original).

Some courts have determined that substantial compliance

is not acceptable in the context of a tax seizure. This view

follows that of Chief Justice Marshall that “the person

invested with such a power [to convey land] must pursue with

precision the course prescribed by the law, or his act is

invalid . . . .” Thatcher v. Powell, 19 U.S. (6 Wheat.) 119,

125 (1821). In Reece v. Scroggins, the leading case

advocating strict construction, the court voided a tax sale

because the IRS “handled this sale of land in a somewhat

casual fashion,” including failure to comply with notice

requirements and irregularities in the subsequent public

auction. Reece, 506 F.2d at 970. The main rationale behind

the court’s holding was a recognition of the “Damoclean

nature” of the IRS’s ability to seize property to satisfy

legitimate tax deficiencies and of the importance of strict

adherence to the statute to protect the taxpayer. Id. at 971;

Aqua Bar & Lounge, Inc. v. United States Dept. of Treasury,

539 F.2d 935, 939 (2d Cir. 1976) (same). 

12 Grable & Sons Metal Products

v. Darue Engineering

No. 02-1678

In this case, however, Grable was amply protected. It

received actual notice of the tax sale, which was one of

several resulting from a six-year hiatus from paying taxes. It

has not alleged any actual prejudice as a result of receiving

notice through certified mail, nor did it take any action

against Darue for six years. The protections in the statute are

designed to prevent the government from seizing property

without warning. The district court did not err in refusing to

extend these protections to a delinquent taxpayer who knew

that its property was being seized but waited years to assert its

rights.

Although the statute allows for substantial compliance, the

district court also analyzed the case under equitable

principles, coming to the same favorable conclusion for

Darue. Because we may affirm the district court on any

ground supported by the record, we do not have to review the

district court’s application of equity, Shaw v. Deaconess

Hosp., 355 F.3d 496, 498 (6th Cir. 2004), but we make two

short points. In a case with similar defects in notice, the

United States District Court for the Eastern District of

Michigan applied equity in holding that substantial

compliance was sufficient to validate the sale. Howard, 538

F. Supp. at 508 (applying Michigan law to resolve the quiet

title action). Secondly, the district court’s decision to apply

equity to dismiss Grable’s quiet title motion does not

contradict an earlier Michigan Court of Appeals quiet-title

action that was decided in Grable’s favor. Village of

Dimondale v. Grable, 618 N.W.2d 23 (Mich. App. 2000). In

defending an action to quiet title to another piece of property

that Mr. Grable owned personally, he argued that the tax sale

was not valid because of defective IRS notice. The state

appeals court held that, as a defendant, he did not have to

worry about sleeping on his rights but was entitled to assert

any valid defense. Dimondale, 618 N.W.2d at 31-32. The

court also noted that “equity is a shield, not a sword.” Id. at

32. The district court properly relied on that maxim when it
No. 02-1678 Grable & Sons Metal Products v. Darue

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13

held that a delay of approximately six years in pressing a

claim provided sufficient basis in equity to deny Grable relief.

IV

For the reasons set out above, we AFFIRM the decision of

the district court to deny Grable summary judgment and to

award judgment to Darue.