COMPANIES INACCURATELY BRING CAUSE OF ACTION IN LEVY; DISTRICT COURT DISMISSES WITHOUT PREJUDICE.

For the reasons set forth below, the Court agrees.

26 U.S.C. § 7426(a)(1) provides for a waiver of sovereign immunity in the following situation:

Here, Plaintiffs allege that the United States "illegally arbitrarily and unlawfully issued and recorded a lien against Plaintiff's property." (Leeds FAC ¶ 11; Fourth Investment FAC ¶ 11) Although each complaint contains general language asserting that the "property liened, levied, and seized" belongs to Plaintiffs (FAC ¶¶ 10, 20, 22), it appears from the remainder of the complaints that Plaintiffs only allege a lien placed on the property rather than a levy and seizure. As set forth by the Ninth Circuit and the Supreme Court, a lien is a security interest in property that has not been enforced whereas a levy is the seizure and sale of a property to collect taxes. EC Terms of Years at 1763; United States v. Barbier, 896 F.2d 377, 379 (9^th Cir. 1990). Because statutory waivers of sovereign immunity must be strictly construed, the Court cannot accept Plaintiffs' argument that they should be allowed to challenge a lien pursuant to 26 U.S.C. § 7246 because a lien is the first step towards a levy and seizure. Safeway Portland Employees' Fed. Credit Union v. FDIC, 506 F.2d 1213, 1216 (9^th Cir. 1974). The Court also notes that Plaintiffs are not without a remedy because they may resolve the allegedly wrongful lien through their quiet title cause of action.³

Because the waiver of sovereign immunity under § 7246 does not reach the facts as alleged in Plaintiffs' complaints, the Court dismisses the first cause of action in both related cases for lack of jurisdiction without prejudice. Plaintiffs may at any time during the pendency of this proceeding amend their complaint to allege that a levy has occurred. IT IS SO ORDERED. DATED: May 22, 2008

² The other sections of § 7426 provide for relief in situations where (1) the property has been sold pursuant to a levy; (2) the property has been sold and the proceeds of the sale held subject to liens of the United States; or (3) a certificate of discharge has been issued because the owner of the property deposited the value of the lien. Plaintiffs do not appear to contend that they seek relief under these provisions or § 7426. Nor do these provisions appear applicable to Plaintiffs given the facts as pled in the operative complaint.

³ The Court has reviewed First American Title Insurance Company v. United States, 520 F.3d 1051 (9^th Cir. 2008) which was submitted by Plaintiffs as supplemental authority. While First American generally notes that not all lien cases need be treated under § 1346 as opposed to § 7246, it does not hold that an allegedly wrongful lien may be challenged under § 7246(a)(1) for wrongful levies. Other provisions such as § 7426(a)(4)specifically deal with circumstances in which a lien is involved as opposed to a levy.