PANAHANDEH v. U.S

JOE BROWN, Magistrate Judge

For the reasons stated in the accompanying memorandum, the third party plaintiff's motion to amend (Docket Entry No. 18) is DENIED and the motion of the United States to dismiss (Docket Entry No. 14) is GRANTED. The claims against the United States are DISMISSED for lack of jurisdiction. The remaining claims involving other parties are remanded to the Chancery Court of Davidson County from when they were originally removed for lack of federal jurisdiction.

It is so ORDERED.

Presently pending before the Court is the United States' motion to dismiss (Docket Entry No. 14). The motion has been briefed (Docket Entry Nos. 18, 19, 20, and 23). The Government's original motion argues that the Court lacks jurisdiction pursuant to 28 U.S.C. § 2410.

This case came to the Court by way of the original defendant, Hafizollah Panahandeh being a defendant sued by the Metropolitan Government of Nashville for costs incurred by the Metropolitan Government in demolishing a condemned building on property located at 2612 Buena Vista Pike in Nashville, Tennessee. In defending the case, Mr. Panahandeh filed a third party complaint naming the United States as a third party defendant. The United States promptly removed the matter to federal court where it now rests.

In his complaint against the United States, Mr. Panahandeh alleged as the sole grounds for jurisdiction 28 U.S.C. § 2410.

The plaintiff, in responding to the motion to dismiss (Docket Entry No. 18) agrees with the United States that the Court has no jurisdiction pursuant to 28 U.S.C. § 2410. This section allows jurisdiction where there is an action to (1) quiet title; (2) to foreclose a mortgage or other lien; (3) to petition; (4) to condemn; or (5) of interpleader or in the nature of an interpleader with respect to real or personal property on which the United States has or claims a mortgage or other lien. The United States points out that the United States has no present lien on the property at 2612 Buena Vista Pike. Mr. Panahandeh does not contest this point. Accordingly, there is no dispute as to the lack of jurisdiction under 28 U.S.C. § 2410.

The plaintiff, in responding to the motion to dismiss (Docket Entry No. 18), now alleges that jurisdiction is proper under 28 U.S.C. § 1346(a)(2), inasmuch as he claims this is a contract action in an amount less than $10,000.00, and accordingly may be heard in District Court. He therefore requests permission to amend his complaint to allege this section as grounds for jurisdiction.

The United States in replying to this response (Docket Entry No. 19) argues that such amendment would be futile inasmuch as Mr. Panahandeh would have no cause of action against the United States for breach of contract. Mr. Panahandeh then sought and requested permission to file a response to this reply, and after being granted permission did so (Docket Entry No. 23). Mr. Panahandeh correctly points out that the United States has gone outside the record. However, the United States has gone outside the record only in responding to Mr. Panahandeh's request to change the jurisdictional basis of his complaint. It does not appear that there is in fact a factual dispute about the materials cited, inasmuch as for the most part they are deeds and documents on file with the Registrar of Deeds.

The background of this litigation appears in general as follows. The property in question has a street address of 2612 Buena Vista Pike. It apparently is adjacent to a piece of property with a street address of 2616 Buena Vista Pike. Apparently, as shown by the affidavit of Scott Biggs (Docket Entry No. 20, Exh. 1), the legal description of the properties located at these two addresses were reversed beginning with recordings in Deed Book 4746, pages 118 and 166, years before the present controversy arose. The property with the street address of 2612 Buena Vista Pike was identified as parcel 11 when in fact it was parcel 12. The property with the street address 2616 Buena Vista Pike was identified as parcel 12 when in fact it was parcel 11. Apparently in 1975 both pieces of property were conveyed to the taxpayer and to his siblings by warranty deed. In 1989 there were additional transfers between the siblings and the original taxpayer in this matter, Mr. Allison H. Grayson. In the 1989 transaction, this error is again repeated with parcels 11 and 12 being reversed. In a 1995 transaction, it appears that 2612 Buena Vista Pike was conveyed to the taxpayer by Quitclaim Deed in Book 9730, page 800. Once again, however, the property identified as 2612 Buena Vista Pike used the meets and bounds description and parcel number of 2616 Buena Vista Pike.

Due to tax delinquencies by the taxpayer, the United States seized the property identified as 2612 Buena Vista Pike on October 30, 1996, and after appropriate notices of sale sold the property on December 4, 1996 to the plaintiff for the sum of $1,288.00. The exhibits to Docket Entry No. 20 show that the property described as 2612 Buena Vista Pike, consisting of a house of approximately 1400 square feet and a lot of .34 acres, in fact was sold to the plaintiff. For a legal description see Deed Book 9730, page 800, Registrar's Office for Davidson County Tennessee.

Interestingly enough, it also appears that at the same time the Internal Revenue Service ("IRS") purported to sell Mr. Grayson's one-quarter interest in improved real property located at 2616 Buena Vista Pike, which also consisted of a wood frame house of approximately 1400 square feet. The legal description for this tract was listed in Deed Book 9113, page 819. The sealed bid sale described the nature of the title as follows:

The right, title, and interest of the taxpayer (named above) in and to the property is offered for sale subject to any prior valid outstanding mortgages, encumbrances, or other liens in favor of third parties against the taxpayer that are superior to the lien of the United States. All property is offered for sale "where is" and "as is" and without recourse against the United States. No guaranty or warranty, expressed or implied, is made as to the validity of the title, quality, quantity, weight, size, or condition of any of the property, or its fitness for any use or purpose. No claim will be considered for allowance or adjustment or for rescission of the sale based on failure of the property to conform with any expressed or implied representation.

Mr. Panahandeh submitted his sealed bid for the property on December 3, 1996, using Revenue Form 2222. The reverse of the form once again points out that the property is offered for sale as is, where is, without recourse against the United States, and that no guaranty or warranty expressed or implied is made as to the validity of the title, quality, quantity, weight, size or condition of any of the property or its fitness for any use or purpose.

Subsequently, after the time for redemption by the taxpayer passed, the IRS issued Mr. Panahandeh a Quitclaim Deed (Docket Entry No. 20, Exh. 4), which was registered July 21, 1997, with the Registrar of Deeds at Book 10536, page 230. The deed at the top reflects a map parcel of 70-6 Parcel 11. This deed, which is listed as a Quitclaim Deed recites the description of the property by meets and bounds as having previously been recorded at Book 9730, page 800.

In October 1997, the Metropolitan Government began proceedings to demolish the building on this property, and in doing so incurred expenses of some $4,873.00 and change. It appears that the Metropolitan Government used plat records rather than street addresses and it appears that the notice of the impending demolition of the building was sent to Mr. Grayson and to the IRS but not to Mr. Panahandeh.

The Metropolitan Government completed its action of demolishing the building and actually placed a lien on the property on July 27, 1998.

In June 1998, Mr. Panahandeh began discussing with the IRS errors in the deed. On February 10, 1999, the IRS issued a corrected deed. The corrected deed refers to Map 70-6, Parcel .12. The deed of correction reflects that the original conveyance incorrectly contained the meets and bounds description of improved property known as 2616 Buena Vista Pike, and therefore, to conform the deed to the original intention of the parties and to correct and make good any deficiencies to the description of the property, the description was changed to reflect a new description by meets and bounds and to point out that the deed from 1989 and 1995 both contained the wrong property description. Once again, the deed is a Quitclaim Deed (Docket Entry No. 20, Exh. 5).

Rule 15 provides that leave to amend should be freely given. Leave to amend should only be denied when it appears that such an amendment would be futile. Thus, in order to consider whether the amended complaint would be futile, the Court takes the allegations in the complaint as true, and if there is any arguable possibility that Mr. Panahandeh could prevail on his claim, the amendment should be allowed. Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417 (6^th Cir. 2000).

A review of the third-party complaint (Docket Entry No. 1, Exh. A), attaches a copy of the first deed from the IRS to Mr. Panahandeh, as well as a copy of the corrected deed. Thus, these documents are contained in Mr. Panahandeh's pleadings.

The Court thus turns to whether given these documents it is possible for the plaintiff to prevail in this matter. T.C.A. § 66-5-103 provides that the following language constitute a quitclaim deed: "I hereby quitclaim to A.B. all my interest in the following land", [describing it].

Tennessee law also holds that "A purchaser of land is charged with notice of the recitals of the deed in his chain of title, and of every fact of which with reasonable prudence or diligence he ought to become acquainted". Additionally, "If the context of a recorded deed in a purchaser's chain of title shows a clerical error of the person who transcribed it on the record, the purchaser would be chargeable with notice thereof, and would be put on inquiry". Teague v. Sowder, 114 S.W. 484 (Tenn. 1908). In this case it is clear that the United States sold the property with a Quitclaim deed and without warranties of any nature. As such, Mr. Panahandeh as the purchaser would have had a duty as part of due diligence to inspect the property and ensure that the meets and bounds description corresponded with the street address. Although Mr. Panahandeh claims in his response to the United States' response (Docket Entry No. 23) that the deed is more than a Quitclaim deed, he cites no authority for that proposition and the Court concludes that the language of the deed does in fact show that it is a Quitclaim deed and as such was without warranties. If the description of the property was in error, it was incumbent upon Mr. Panahandeh as the purchaser to inspect the property and ascertain that the meets and bounds contained in the deed corresponded to the property he believed he was buying. See Pia v. United States, 7 Cl.Ct. 208, 211 (1985).

Accordingly, the Court finds that there is no jurisdiction under 28 U.S.C. § 2410 and that the plaintiff's motion to amend would be futile. Accordingly, the motion to amend to allege jurisdiction under 28 U.S.C. § 1346(a)(2) is denied as futile.

This case was removed to federal court solely on the basis that the United States was a party. Inasmuch as the United States is being dismissed as a party and there is no further federal jurisdiction in the matter, the case must be remanded to the Chancery Court. An appropriate order will enter.