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Berkery v. Commissioner of Internal Revenue

January 11, 2010


The opinion of the court was delivered by: Joyner, J.


This case is now before the Court on Defendants' Motion to Dismiss Plaintiff's Amended Complaint (Doc. No. 16). For the reasons set forth below, Defendants' Motion to Dismiss is GRANTED.

Factual Background

This dispute centers around Plaintiff's tax liability for the property at 652 Bethlehem Pike in Flourtown, Pennsylvania. This home served as Plaintiff's only residence from 1990 until 1998. Plaintiff owned this property subject to a mortgage held by WMC Mortgage Co. ("WMC") and a second mortgage held by LaSalle National Bank. In 1998, Plaintiff had fallen behind on her mortgage payments, and WMC began foreclosure proceedings on the property. Rather than require WMC to complete foreclosure, Plaintiff agreed to turn over the property in exchange for a cancellation of her debt and to avoid any further liability on the property.

The Internal Revenue Service first contacted Plaintiff concerning the 652 Bethlehem Pike property in 2008. At that time, it advised Plaintiff that she had not properly reported the discharge of indebtedness that she received from WMC as income on her tax returns. The I.R.S. informed Plaintiff that she owed approximately $18,000 in taxes based on this discharge-of-indebtedness income. Further, Defendant Commissioner of Internal Revenue ("Commissioner") refused to disburse Plaintiff's 2008 tax refund of $1,967 due to this allegedly outstanding debt.

Plaintiff asserts that Defendant Commissioner has illegally assessed her income tax by classifying the discharge of indebtedness for the 652 Bethlehem Pike property as taxable income. She seeks direct relief pursuant to the Fifth and Fourteenth Amendments of the United States Constitution, a writ of mandamus pursuant to the Mandamus Act, 28 U.S.C. § 1361, and to bring a refund suit under 28 U.S.C. § 1346(a)(1) and 26 U.S.C. § 7422.

Defendants claim that this Court lacks subject matter jurisdiction to adjudicate these claims due to the doctrine of sovereign immunity. Defendants, therefore, have filed a Motion to Dismiss based on Federal Rule of Civil Procedure 12(b)(1).


Federal Rule of Civil Procedure 12(b)(1) requires a court to dismiss a complaint if there is a lack of subject matter jurisdiction. In evaluating a Rule 12(b)(1) motion to dismiss, a court can treat the motion as either a facial or a factual challenge to the plaintiff's complaint. Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). In reviewing a facial challenge, the court is limited to considering the complaint itself and any attachments thereto, and must view the facts in the light most favorable to the non-moving party. Id. In a factual challenge, however, the court is permitted to consider other evidence introduced by the parties. Id. When reviewing a factual challenge, the court may "weigh the evidence and satisfy itself as to the existence of its power to hear the case." Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1997). Further, not only is there no presumption that the facts pled by the plaintiff are true in a factual challenge, but the burden of establishing the court's jurisdiction falls on the plaintiff. Id.


Although Defendants claim to bring a factual challenge to the existence of subject matter jurisdiction, their Motion to Dismiss appears to more appropriately be characterized as a facial challenge. As the court in Gould Electronics noted, it is only when the defendant contests the pleadings by presenting evidence that a factual challenge arises; if the defendant does not raise any evidentiary challenge to the facts as pled by the plaintiff, these should be accepted as true for the purpose of the motion to dismiss. 220 F.3d at 177. In the present case, Defendants do not introduce any evidence extrinsic to the pleadings, nor do they appear to contest any of Plaintiff's factual allegations. Instead, Defendants simply assert that Plaintiff's Complaint has not set forth a legal basis for subject matter jurisdiction. For these reasons, we will treat Defendants' Motion to Dismiss as a facial challenge to Plaintiff's Complaint.

Plaintiff points to three separate sources as providing this Court with subject matter jurisdiction. First, Plaintiff claims a private right of action contained in the Constitution itself. Second, Plaintiff points to the Mandamus Act as providing this Court with subject matter jurisdiction over her claims against Defendant Commissioner. Finally, Plaintiff alleges that this Court has jurisdiction pursuant to the federal statutes that provide a cause of action for a refund suit against the United States. Defendants argue that none of these allow Plaintiff to avoid sovereign immunity's reach, and, therefore, seek dismissal.

We begin with a general discussion of the doctrine of sovereign immunity, and then will examine whether each of Plaintiff's claims fall into any exceptions to the doctrine. As we agree with Defendants that sovereign immunity operates to bar all of Plaintiff's ...

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