Hattrup v. United States

• Court: Court of Appeals for the Tenth Circuit
• Decided: February 3, 2021
• Docket: 20-3011
• Status: Unpublished

Opinion

FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit

FOR THE TENTH CIRCUIT February 3, 2021 _________________________________ Christopher M. Wolpert Clerk of Court SCOTT GREGORY HATTRUP,

Plaintiff - Appellant,

v. No. 20-3011 (D.C. No. 5:17-CV-04083-DDC) UNITED STATES OF AMERICA; JULIA (D. Kan.) DENG, a/k/a Julia D. Palmer,

Defendants - Appellees. _________________________________

ORDER AND JUDGMENT * _________________________________

Before LUCERO, BACHARACH, and PHILLIPS, Circuit Judges. _________________________________

Scott Gregory Hattrup appeals from the judgment entered following the district

court’s dismissal all claims against the United States and its grant of summary

judgment in favor of Julia Deng. Exercising jurisdiction pursuant to 28 U.S.C.

§ 1291, we affirm.

* After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. I. Background

Hattrup had several years of unpaid federal income tax liabilities. In a

previous action, the United States obtained district court approval for a judicial levy

on property that Hattrup owned in Johnson County, Kansas (the “Property”), to

collect on those liabilities.

In April 2016, the Internal Revenue Service (“IRS”) provided Hattrup with a

notice of seizure of the Property. In August of that year, the IRS provided him with a

notice of sale by public auction (“Notice of Sale”). The Notice of Sale listed

October 6, 2016, as the scheduled public auction date. It also identified the IRS’s

Property Appraisal & Liquidation Specialist (“PALS”) for the scheduled sale and

included a telephone number and address “for information about the sale.” R. at 110.

The Notice of Sale set forth Hattrup’s statutory redemption rights both before and

after the sale. As to the latter, the Notice of Sale stated that Hattrup’s right of

redemption would run for 180 days after the sale and that the redemption price would

be the amount paid at the sale plus interest at 20% per annum.

The public auction sale of the Property took place, as scheduled, on October 6,

2016. Hattrup did not attend the sale. Deng was the high bidder for the Property.

She paid the purchase price the same day and received from the PALS a certificate of

sale and a letter indicating the sale would be finalized after expiration of the 180-day

redemption period if the Property was not redeemed by that time.

2 The IRS provided no further notice regarding the sale of the Property to

Hattrup. He did not communicate with the PALS or any other IRS employee

regarding the Property or the sale during the redemption period.

In early May 2017, after the redemption period had expired, Deng surrendered

the certificate of sale in exchange for a quitclaim deed. Deng recorded the quitclaim

deed in Johnson County, Kansas, on May 15, 2017. She hand delivered to Hattrup a

notice to quit the premises on May 17, 2017. Hattrup learned of the sale of the

Property at that time. When he did not vacate the Property, Deng filed an eviction

action in state court and received a judgment for possession in July 2017.

Hattrup filed this pro se action against the United States and Deng in

September 2017. While conceding he had received the Notice of Sale, he alleged that

the United States violated his right to due process under the Fifth and Fourteenth

Amendments by failing to provide him an additional notice after the sale of the

Property. Hattrup contended that the Notice of Sale was constitutionally insufficient

because it did not include all of the information—specifically, the name and address

of the purchaser and the purchase price—that was necessary for him to exercise his

post-sale right to redeem. Hattrup sought (1) to enjoin enforcement of the quitclaim

deed, (2) additional time to redeem the Property, and (3) to quiet title to the Property

in his favor if he did redeem. Alternatively, he sought damages from the United

States.

3 The district court granted the United States’ motion to dismiss all of the claims

against the government. As relevant to Hattrup’s contentions on appeal, 1 the court

held that the statutory waiver of sovereign immunity pursuant to 28 U.S.C. § 2410

did not apply in Hattrup’s case. The district court also granted summary judgment in

favor of Deng, concluding that the Notice of Sale provided Hattrup constitutionally

sufficient notice.

II. Discussion

On appeal, Hattrup argues the district court erred in holding the waiver of

sovereign immunity in § 2410 was inapplicable in his case. Alternatively, he

contends that a waiver of sovereign immunity is implied in tax sale cases. Hattrup

further argues that the Notice of Sale was insufficient to satisfy due process with

respect to his post-sale right to redeem.

We review de novo both the district court’s dismissal of Hattrup’s claims

against the United States, see Jones v. Needham, 856 F.3d 1284, 1289 (10th Cir.

2017), and its grant of summary judgment in favor of Deng, see Utah Republican

Party v. Cox, 892 F.3d 1066, 1076 (10th Cir. 2018). We liberally construe Hattrup’s

pro se arguments on appeal. See Cummings v. Evans, 161 F.3d 610, 613 (10th Cir.

1998). 2

1 Hattrup does not challenge on appeal several of the district court’s bases for dismissing his claims against the United States. 2 Hattrup was formerly a licensed attorney in Kansas. Although liberal construction does not apply to an attorney proceeding pro se, see Smith v. Plati, 4 A. Dismissal of Claims Against the United States for Lack of Jurisdiction

The United States cannot be sued except in strict accordance with the terms of

a specific waiver of sovereign immunity granted by Congress. See Lane v. Pena,

518 U.S. 187, 192 (1996) (holding that any waiver of “sovereign immunity must be

unequivocally expressed in statutory text” and “will be strictly construed, in terms of

its scope, in favor of the sovereign”). “The defense of sovereign immunity is

jurisdictional in nature, depriving courts of subject-matter jurisdiction where

applicable.” Normandy Apartments, Ltd. v. U.S. Dep’t of Hous. & Urb. Dev.,

554 F.3d 1290, 1295 (10th Cir. 2009).

Hattrup argues the United States waived sovereign immunity pursuant to

§ 2410, which provides, in relevant part:

Under the conditions prescribed in this section . . . for the protection of the United States, the United States may be named a party in any civil action or suit in any district court . . . to quiet title to . . . real or personal property on which the United States has or claims a mortgage or other lien. 28 U.S.C. § 2410(a)(1) (emphasis added). “Section 2410(a) expressly authorizes

quiet title actions affecting property on which the United States has a lien only

‘[u]nder the conditions prescribed in this section,’” including the pleading

requirements in § 2410(b). Dahn v. United States, 127 F.3d 1249, 1251 (10th Cir.

1997) (quoting § 2410(a)). The district court held that § 2410 did not provide a

waiver of sovereign immunity in this action for two reasons: (1) the United States

258 F.3d 1167, 1174 (10th Cir. 2001), the district court noted that Hattrup’s license is inactive, see R. at 69 n.1. 5 did not have or claim a lien on the Property at the time Hattrup filed this action

because its tax lien on the Property was extinguished upon the completion of the sale

to Deng, and (2) Hattrup’s complaint failed to comply with the mandatory technical

pleading requirements of § 2410(b). Hattrup fails to demonstrate error in either of

these rulings, but to affirm the dismissal of his claims against the United States we

need only address the district court’s first reason.

The waiver of sovereign immunity in § 2410 “must be narrowly construed.”

Lonsdale v. United States, 919 F.2d 1440, 1443 (10th Cir. 1990). In Dahn, 127 F.3d

at 1251 (10th Cir. 1997), we affirmed a district court’s denial of leave to amend the

plaintiff’s complaint to invoke the waiver of sovereign immunity in § 2410. In

addition to the plaintiff’s failure to satisfy the pleading requirements in § 2410(b),

see id., we noted that her proposed amended complaint did not object to an existing

lien interest by the United States, but instead challenged collection efforts that had

already resulted in the sale of her property, see id. at 1251 n.1. We held that “[a]

quiet title claim [under § 2410], first made when any liens involved no longer

existed, was barred ab initio.” Id.; see also Koehler v. United States, 153 F.3d 263,

266-67 (5th Cir. 1998) (holding based on “the plain terms of the statute” that a

“taxpayer may maintain a suit under § 2410(a) only if at the time she files suit the

government had a mortgage or other lien on the property that is the basis of the

taxpayer’s quiet title action”); Hughes v. United States, 953 F.2d 531, 538 (9th Cir.

1992) (“[W]hile a taxpayer may contest the procedural validity of a tax lien under

§ 2410, he may do so only if, at the time the action is commenced, the government

6 still claims a lien or a mortgage on the property. If the government has sold the

property prior to the filing of the suit, and no longer claims any interest in the

property, § 2410 does not apply.”). Thus, the district court did not err in holding it

lacked jurisdiction over Hattrup’s claims against the United States because the

government neither had nor claimed a lien interest in the Property at the time he filed

this action, as required for a waiver of sovereign immunity under § 2410. 3

Hattrup nonetheless asserts that he should be able to pursue his claims against

the United States under an implied waiver of sovereign immunity that he maintains is

applicable in tax sale cases. But it is well settled that a waiver of sovereign

3 Hattrup argues that other courts have held otherwise, but we are bound by the decision in Dahn, including its reasoning underlying the holding that the plaintiff’s proposed amended complaint failed to invoke the waiver of sovereign immunity in § 2410. See United States v. Meyers, 200 F.3d 715, 720 (10th Cir. 2000) (“The precedent of prior panels which this court must follow includes not only the very narrow holdings of those prior cases, but also the reasoning underlying those holdings, particularly when such reasoning articulates a point of law.”). Nor does Hattrup even attempt to distinguish our holding in Dahn. See id. (rejecting a party’s attempt to distinguish this court’s prior case law). 7 immunity “cannot be implied but must be unequivocally expressed.” United States v.

Testan, 424 U.S. 392, 399-400 (1976) (internal quotation marks omitted).

We affirm the district court’s dismissal of Hattrup’s claims against the United

States for lack of jurisdiction because the government did not waive sovereign

immunity.

B. Summary Judgment in Favor of Deng

In granting summary judgment in favor of Deng, the district court held that the

notice the IRS provided to Hattrup satisfied due process. The Internal Revenue Code

requires that, after a seizure of property, a notice of sale must be provided to the

property owner “specify[ing] the property to be sold, and the time, place, manner,

and conditions of the sale thereof.” 26 U.S.C. § 6335(b). Hattrup conceded that he

received the Notice of Sale pursuant to § 6335(b). Although not required by statute,

the Notice of Sale also informed Hattrup of his post-sale redemption rights pursuant

to 26 U.S.C. § 6337(b) by quoting that section verbatim. See R. at 111. Hattrup

contended this notice of his redemption rights did not satisfy due process because it

was provided before the sale of the Property and did not include enough

information—specifically, the name and address of the purchaser and the purchase

price—to allow him to redeem the Property after the sale.

“Procedural due process imposes constraints on governmental decisions which

deprive individuals of ‘liberty’ or ‘property’ interests within the meaning of the

Due Process Clause of the Fifth or Fourteenth Amendment.” Mathews v. Eldridge,

424 U.S. 319, 332 (1976). But “due process, unlike some legal rules, is not a

8 technical conception with a fixed content unrelated to time, place and

circumstances.” Id. at 334 (brackets and internal quotation marks omitted). Rather,

“due process is flexible and calls for such procedural protections as the particular

situation demands.” Id. (alteration and internal quotation marks omitted). Moreover,

“the Due Process Clause has never been construed to require that the procedures used

to guard against an erroneous deprivation of a protectible ‘property’ or ‘liberty’

interest be so comprehensive as to preclude any possibility of error.” Mackey v.

Montrym, 443 U.S. 1, 13 (1979). Thus, the determination whether due process is

satisfied in a particular case “requires analysis of the governmental and private

interests that are affected.” Mathews, 424 U.S. at 334. To that end, the Supreme

Court has directed courts to consider “three distinct factors”:

First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. Id. at 335.

More specifically, as it relates to Hattrup’s contention on appeal, due process

requires “notice [that is] reasonably calculated, under all the circumstances, to

apprise interested parties of the pendency of the action and afford them an

opportunity to present their objections.” Mullane v. Cent. Hanover Bank & Tr. Co.,

339 U.S. 306, 314 (1950); see also Mennonite Bd. of Missions v. Adams, 462 U.S.

791, 798 (1983) (holding a mortgagee was “entitled to notice reasonably calculated to

9 apprise him of a pending tax sale”). Consequently, once “one is informed that the

matter is pending,” he “can choose for himself whether to appear or default,

acquiesce or contest.” Mullane, 339 U.S. at 314.

Considering the Mathews factors, the district court first held that the right of

redemption is a significant property interest that is entitled to due process protection.

Thus, the court concluded that the first factor favored Hattrup.

The court next considered the risk of an erroneous deprivation of Hattrup’s

property interest due to the notice the IRS provided. It noted that he received notice

of his statutory post-sale redemption rights in advance of the sale, as well as the date

and location of the sale and the PALS’ contact information to answer any questions

he had regarding the sale. Yet he neither attended the sale nor contacted the PALS to

inquire whether the Property had been sold. The district court held that “due process

does not require notice of every detail about every incremental step of the foreclosure

process. Instead, it requires notice ‘reasonably calculated, under all the

circumstances, to apprise interested parties of the pendency of the action and afford

them an opportunity to present their objections.’” R. at 234 (quoting Mullane,

339 U.S. at 314). The court concluded that the Notice of Sale—which was delivered

to Hattrup before the 180-day right to redeem began—“was reasonably calculated

under all the circumstances to apprise plaintiff both of the pending sale and

commencement of his time-limited, post-sale redemptions rights.” Id. at 235.

Further, his choice “not to determine the status of the sale does not mean that the

pre-sale [Notice of Sale] did not comport with due process.” Id. at 236.

10 The district court next considered “the probable value of additional

safeguards.” Id. at 238. It concluded that a second, post-sale notice would not

materially reduce the risk that Hattrup would be erroneously deprived of his

redemption rights because he had already been notified that those rights were at risk

and were expected to expire 180 days after the sale, and because the Notice of Sale

provided enough information for Hattrup to take steps to redeem if he so chose. The

court held that “[t]he value of an additional post-sale notice confirming the sale

results does not nullify the conclusion that the initial notice informed plaintiff of his

redemption rights. It was reasonably calculated to provide constitutionally adequate

notice under the circumstances.” Id. at 240. Thus, the court held that the second

Mathews factor heavily favored the United States because the risk of erroneous

deprivation was low where Hattrup received actual notice of the sale and his

redemption rights but “simply failed to take any steps to preserve his rights.” Id.

Finally, the district court briefly considered the third Mathews factor—the

burden on the government of requiring a second, post-sale notice—and concluded it

did not favor Hattrup. Having already found that the Notice of Sale satisfied

constitutional due process requirements as to Hattrup’s redemption interest, the court

held that providing notice of his redemption rights in the Notice of Sale “conserves

taxpayer resources and minimizes administrative burden by providing actual notice of

the sale and the redemption rights together.” Id. at 243.

Thus, after considering all of the Mathews factors, the district court held that

Hattrup did not have a constitutional right to post-sale notice of his redemption rights

11 under the circumstances presented. It therefore granted summary judgment in favor

of Deng on Hattrup’s claims stemming from the alleged due process violation.

Hattrup argues that all three Mathews factors weigh in favor of requiring the

government to provide an additional, post-sale notice providing the name and address

of the purchaser and purchase price. He contends that due process requires such

notice at a bare minimum, but he cites no authority for this proposition. 4 Hattrup

also argues that the Notice of Sale was insufficient because it failed to state how he

could obtain the information necessary for him to redeem after the sale. On the

contrary, the Notice of Sale provided him two avenues to obtain that information: by

attending the sale or by contacting the PALS. Hattrup contends the Notice of Sale

improperly shifted to him the burden of obtaining that post-sale information. But due

process requires only notice of the pending proceeding and an opportunity to act in

response. And Hattrup received such notice via the Notice of Sale. Finally, Hattrup

argues that a post-sale notice “could easily be prepared by the IRS staff while

working on the other [post-sale] documents required.” Aplt. Br. at 16-17. But he

ignores the district court’s other bases for concluding that the final Mathews factor

weighed against him.

In sum, Hattrup received notice that the sale of the Property was pending. He

chose not to attend the sale or otherwise exercise the opportunity to act in response to

4 Although Hattrup cites one case in which taxpayers received a post-sale notice of redemption rights, he provides no authority holding that such notice is constitutionally required.

12 that notice. See Mullane, 339 U.S. at 314 (noting that, once informed, a person “can

choose for himself whether to appear or default”). Hattrup fails to demonstrate error

in the district court’s holding that the Notice of Sale was sufficient to satisfy his right

to due process. We therefore affirm the district court’s grant of summary judgment

in favor of Deng.

III. Conclusion

The district court’s judgment is affirmed.

Entered for the Court

Gregory A. Phillips Circuit Judge