Bank of Am. Corp. v. United States

964 F.3d 1099

BANK OF AMERICA CORPORATION, Plaintiff-Appellee

v.UNITED STATES of America, Defendant-Appellant

2019-2357

United States Court of Appeals, Federal Circuit.

Decided: July 2, 2020

Timothy S. Bishop, Mayer Brown, LLP, Chicago, IL, argued for plaintiff-appellee. Also represented by Marjorie Margolies ; Geoffrey M. Collins, Croton-on-Hudson, NY; Brian Wright Kittle, New York, NY.

Norah Bringer, Tax Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by Ellen Page DelSole, Richard E. Zuckerman.

Before Lourie, Linn, and Wallach, Circuit Judges.

Wallach, Circuit Judge.

Appellee Bank of America Corporation ("Bank of America") filed a complaint against Appellant the United States ("Government") in the U.S. District Court for the Western District of North Carolina ("District Court"), seeking, inter alia, interest on Federal tax overpayments arising under 26 U.S.C. § 6611. The Government moved to sever Bank of America's overpayment interest claims exceeding $10,000 and to transfer them to the U.S. Court of Federal Claims or, alternatively, to dismiss them for lack of subject matter jurisdiction. The District Court denied the Government's motion. See Bank of Am. Corp. v. United States ("Order "), No. 3:17-cv-546-RJC-DSC, 2019 WL 2745856, at *4 (W.D.N.C. July 1, 2019) ( Order ); see also Bank of Am. Corp. v. United States ("Recommendation "), No. 3:17-cv-546-RJC-DSC, 2019 WL 1349687 (W.D.N.C. Jan. 10, 2019).

The Government appeals. We have jurisdiction pursuant to 28 U.S.C. § 1292(d)(4)(A). We vacate and remand.

BACKGROUND

In January 2009, Bank of America acquired Merrill Lynch & Co., Inc. ("Merrill Lynch"). J.A. 13. In October 2013, Merrill Lynch "merged with and into" Bank of America. J.A. 13. In September 2017, Bank of America filed a complaint against the Government in the District Court, J.A. 1217, which, as amended, sought to recover overpaid interest on Federal tax underpayments as well as additional interest on Federal tax overpayments arising under 26 U.S.C. §§ 6601 and 6611, respectively, J.A. 10–22 (Third Amended Complaint); see 26 U.S.C. §§ 6601(a) ("If any amount of tax ... is not paid ..., interest on such amount ... shall be paid for the period from such last date to the date paid."), 6611(a) ("Interest shall be allowed and paid upon any overpayment in respect of any internal revenue tax[.]"). Relevant here, Bank of America sought to recover additional overpayment interest arising from Federal tax overpayments made by Merrill Lynch ("the Merrill Lynch overpayment interest claims"). J.A. 10–11.

In September 2018, the Government moved to sever the Merrill Lynch overpayment interest claims exceeding $10,000, and requested that the District Court transfer them to the Court of Federal Claims or, alternatively, dismiss them for lack of subject matter jurisdiction. J.A. 1093–94; see J.A. 1088–114 (Brief in Support of Motion to Transfer or, in the Alternative, to Dismiss for Lack of Subject Matter Jurisdiction), 1117 ("Table Summarizing Relief Requested").^{1 ,2}

In January 2019, the Magistrate Judge assigned to the case found that "[t]he weight of authority ... has upheld" the conclusion that district courts have "subject matter jurisdiction over overpayment interest claims pursuant to 28 U.S.C. § 1346(a)(1) [,]" Recommendation , 2019 WL 1349687, at *2 (citing E.W. Scripps Co. v. United States , 420 F.3d 589, 596–97, 598 (6th Cir. 2005) ), and recommended that the Government's Motion be denied, id. at *3. In July 2019, the District Court affirmed and adopted the Magistrate Judge's recommendation, and denied the Government's Motion. Order , 2019 WL 2745856, at *4.

DISCUSSION

The sole issue on appeal is whether 28 U.S.C. § 1346(a)(1) provides district courts with jurisdiction over "stand-alone" overpayment interest claims exceeding $10,000.

See Appellant's Br. 1; Appellee's Br. 3; see also Apple Inc. v. Samsung Elecs. Co. , 839 F.3d 1034, 1039 (Fed. Cir. 2016) (en banc) (explaining that our "function [i]s limited to deciding" only those "issues raised on appeal by the parties"). Because the plain language of § 1346(a)(1) excludes overpayment interest claims, we hold that it does not.

I. Standard of Review and Legal Standard

"Under 28 U.S.C. § 1292(d)(4)(A), our jurisdiction is restricted to a review of [a] district court's denial of [a] motion to transfer ... to the Court of Federal Claims. We conduct this review de novo." Souders v. S.C. Pub. Serv. Auth. , 497 F.3d 1303, 1307 (Fed. Cir. 2007) (footnote omitted); see 28 U.S.C. § 1292(d)(4)(A) (providing, in relevant part, that we "have exclusive jurisdiction of an appeal from an interlocutory order of a district court of the United States ... granting or denying, in whole or in part, a motion to transfer an action to the ... Court of Federal Claims").

"Statutory interpretation is an issue of law that we review de novo." Power Integrations, Inc. v. Semiconductor Components Indus., LLC , 926 F.3d 1306, 1313 (Fed. Cir. 2019) (citation omitted). "When [construing] any statute, we look first to the statutory language." Strategic Hous. Fin. Corp. of Travis Cty. v. United States , 608 F.3d 1317, 1323 (Fed. Cir. 2010) (citing Jimenez v. Quarterman , 555 U.S. 113, 118, 129 S.Ct. 681, 172 L.Ed.2d 475 (2009) ; Lamie v. U.S. Tr. , 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004) ); see Star Athletica, L.L.C. v. Varsity Brands, Inc. , ––– U.S. ––––, 137 S. Ct. 1002, 1010, 197 L.Ed.2d 354 (2017) ("We ... begin and end our inquiry with the text, giving each word its ‘ordinary, contemporary, common meaning.’ " (quoting Walters v. Metro. Ed. Enters., Inc. , 519 U.S. 202, 207, 117 S.Ct. 660, 136 L.Ed.2d 644 (1997) )). If the statutory language is clear, "and the legislative history does not show that congressional intent was clearly contrary to the section's apparent meaning, th[e] meaning of the statute controls, and there is nothing else for us to review." DeCosta v. United States , 987 F.2d 1556, 1558 (Fed. Cir. 1993) (footnote and citation omitted). Our construction "must," however, "to the extent possible, ensure that the statutory scheme is coherent and consistent." Ali v. Fed. Bureau of Prisons , 552 U.S. 214, 222, 128 S.Ct. 831, 169 L.Ed.2d 680 (2008).

"If a taxpayer overpays its taxes, the [Internal Revenue Service (‘IRS’) ] owes the taxpayer interest on that amount[.]" Energy E. Corp. v. United States , 645 F.3d 1358, 1359 (Fed. Cir. 2011) ; see 26 U.S.C. § 6611(a). District courts

have original jurisdiction, concurrent with the ... Court of Federal Claims, of ... [a]ny civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws[.]

28 U.S.C. § 1346(a)(1).

II. The District Court Improperly Concluded that 28 U.S.C. § 1346(a)(1) Provides Districts Courts with Jurisdiction over Overpayment Interest Claims

The District Court concluded that 28 U.S.C. § 1346(a)(1) provides district courts with jurisdiction over overpayment interest claims. See Order , 2019 WL 2745856, at *1. The District Court found the U.S. Court of Appeals for the Sixth Circuit's "rationale in Scripps [to be] persuasive[,]" id. at *2 (citing Scripps , 420 F.3d at 597 ), and like "most courts that have considered the issue[,]" determined that "the broad language of § 1346(a)(1) —specifically the phrase ‘any sum’—includes overpayment interest[,]" id. Thus, the District Court concluded, with minimal additional analysis, that it had jurisdiction over the Merrill Lynch overpayment interest claims, including those exceeding $10,000. See id. at *4.³ The Government contends that the District Court erred, however, as " Scripps rests on flawed reasoning[,]" and instead argues that we should adopt the U.S. Court of Appeals for the Second Circuit's rationale in Pfizer Inc. v. United States , 939 F.3d 173 (2d Cir. 2019), to reach the opposite conclusion, Appellant's Br. 26–27. For all the reasons discussed below, we agree with the Government.

A. The Plain Language of 28 U.S.C. § 1346(a)(1) Excludes Overpayment Interest Claims

When interpreting a statute, we begin with the statutory language. See Strategic Hous. , 608 F.3d at 1323. To fall within the scope of § 1346(a)(1), Bank of America's overpayment interest claims must be an "action ... for the recovery" of one of three things: (1) an "internal-revenue tax alleged to have been erroneously or illegally assessed or collected"; (2) a "penalty claimed to have been collected without authority"; or (3) "any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws[.]" 28 U.S.C. § 1346(a)(1). We agree with the Second Circuit's analysis in Pfizer —and neither party disputes—that "[t]he first two categories listed in § 1346(a)(1) plainly do not apply in this case[,]" as overpayment interest claims are neither an "internal-revenue tax" nor a "penalty." Pfizer , 939 F.3d at 176 ; see id. at 176–77. See generally Appellant's Br.; Appellee's Br.

Turning to the third category of § 1346(a)(1), again, we agree with the Second Circuit, and conclude that the plain language of the statute dictates that this category—and particularly the term "any sum"—refers to amounts that have been previously paid to, or collected by, the IRS, which excludes overpayment interest. See Pfizer , 939 F.3d at 178 ("Th[e] statute contemplates an amount of money—a ‘sum’—previously assessed or retained by the [G]overnment[.]"); id. at 179 ("Overpayment interest is not such an amount, and so it does not fall with the meaning of ‘any sum[.]’ "). The text of § 1346(a)(1) requires that the "sum" sought to be recovered must "have been excessive or ... wrongfully collected[.]" 28 U.S.C. § 1346(a)(1) (emphasis added). Congress's use of...