Opinion
Nos. 02-10032-GAO, 02-10036-GAO
August 12, 2002
ORDER
Cape Ann Savings Bank ("Cape Ann") held real estate mortgages for two separate pieces of property owned by the defendants, Walter and Janet Johnson. The mortgages were foreclosed, and the properties were sold at public auction. After satisfying its own debt, Cape Ann filed interpleader actions in the Massachusetts Superior Court to determine how to disburse the surplus funds to subordinate interest and lien holders. Among the entities having interests in the surplus funds are the Internal Revenue Service (hereinafter "the United States") and the Massachusetts Department of Revenue (hereinafter "the Commonwealth"). The United States removed the cases to this Court pursuant to 28 U.S.C. § 2410 and 1444.
The Commonwealth then filed motions to remand the cases back to state court. The Commonwealth has now withdrawn those motions and has instead moved to dismiss each action as against it on Eleventh Amendment sovereign immunity grounds and subsequently to dismiss the entire action due to the absence of a necessary party under Fed.R.Civ.P. 19.
The complicated procedural posture of this case has created the conflict that is the subject of the Commonwealth's motions to dismiss. Cape Ann, a private plaintiff, filed this action in state court and included as interested parties the Commonwealth and the United States. The United States invoked its statutory right to remove the action to federal court pursuant to 28 U.S.C. § 1444, which allows the United States to remove any action affecting property on which the United States has a lien. See 28 U.S.C. § 2410. The Commonwealth, finding itself in federal court as a defendant in an action prosecuted by a private party, invokes its Eleventh Amendment right not to be sued by private parties in federal court.
The United States argues that the Eleventh Amendment does limit a federal court's jurisdiction over tax lien claims by the United States granted by 28 U.S.C. § 2410 and 1444, and therefore the Commonwealth's invocation of the Eleventh Amendment must give way to the United States' right to have cases involving tax liens determined in a federal forum. The United States also contends that since the United States, and not the private citizen plaintiff, removed the case to federal court the case is analogous to cases holding that states cannot invoke the Eleventh Amendment when they are sued by the United States, citing West Virginia v. United States, 479 U.S. 305, 311 (1987), or to cases holding that the United States can implead a State as a third-party defendant in a suit brought by a private citizen, citing Parks v. United States, 784 F.2d 20, 23 (1st Cir. 1986).
The United States' first argument fails to surmount a hurdle erected by Seminole Tribe of Florida v. Florida, 517 U.S. 44, 56 (1996), where the Supreme Court explained that a congressional intent to abrogate a State's Eleventh Amendment sovereign immunity must be "unmistakably clear in the language of the statute." The removal statutes do not make that clear. The flaw in the United States' second argument is that the proposed analogies assume that the Commonwealth is subject only to claims by the United States. In the interpleader, however, there will also be claims by interested private parties, including a claim by Cape Ann to be released from any obligation to the Commonwealth beyond the payment of the surplus amount into court for appropriate disbursement.
It must be concluded that the Commonwealth has properly invoked its Eleventh Amendment immunity. The motions to dismiss the Commonwealth as a party are granted. (Dkt. Nos. 12, 10). The parties have offered several alternative resolutions to the procedural problems presented in this case, all of which involve cooperation between the United States and the Commonwealth and none of which this Court can order. In the absence of some accommodation, however, it appears that the Commonwealth is an indispensable party, warranting dismissal of the cases in their entirety. See Fed.R.Civ.P. 19(b). The actions are DISMISSED.
IT IS SO ORDERED.