Fidelity and Deposit Company of Maryland v. City of Adelanto United States Internal Revenue Service

Fidelity and Deposit Company of Maryland (F & D) claims an interest in funds held by the City of Adelanto upon which the Internal Revenue Service issued a notice of levy. A contractor for whom F & D was surety had defaulted, F & D stepped up to the plate and paid to complete the project, and it wanted reimbursement from funds held by the City otherwise due the contractor who had also failed to pay taxes. F & D sued, but not until after the nine month statute of limitations for claims against the IRS for wrongful levy under 26 U.S.C. § 7426 (a)(1) had run. It therefore turned to 28 U.S.C. § 2410 (a)(1), alleging that the federal court had jurisdiction and the United States had waived sovereign immunity for an action to quiet title to the contractor’s funds held by the City.

The problem is that we held in Winebrenner v. United States, 924 F.2d 851 (9th Cir.1991), that the exclusive remedy for a third party whose property has been levied upon by the IES is an action under 26 U.S.C. § 7426 (a)(1) for wrongful levy (which has a nine months statute of limitations), and that an action under 28 U.S.C. § 2410 (a)(1), to quiet title (which has a six years period of limitations), is not…