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Ottaviance v. AVS Properties, LLC

United States District Court, D. New Jersey

July 15, 2019




         I. Introduction and Background [1]

         Pro se plaintiff Michael Balice has an extensive litigation history with this Court. In 2014, the United States government bought a federal tax collection action against Balice and his former spouse. In an action filed in this court, the United States reduced to judgment the overdue tax liability of Balice and his former spouse. United States v. Balice et al, Civ. No. 14-3937 (D.N.J.). Plaintiff Rosewater Trust, a nominal owner of the Metuchen property, was found to be Balice's nominee or alter ego, and set aside. United States v. Balice et al, Civ. No. 14-3937 (D.N.J.) (DE 210).

         I issued an order of sale allowing the Internal Revenue Service ("IRS") to sell the property and directing Balice to vacate the premises. Defendant AVS Properties, LLC ("AVS") submitted the winning bid for the property at a public auction. The Court thereafter confirmed the sale and directed the clerk to distribute the proceeds, applying a portion to Balice's unpaid tax liabilities. The Court also directed the Government to convey the real property to AVS by deed. The action in this Court was characterized by repetitive, indeed abusive, motion practice by Mr. Balice in which he continually refiled the same or similar "tax protester" arguments to the effect that the income tax is unconstitutional. Balice appealed fifteen decision entered by me and nine decisions issued by the Magistrate Judge. The Third Circuit consolidated the appeals and affirmed. See United States v. Balice et al, C.A. No. 17-3134 (3d Cir.).

         Mr. Balice also filed a series of parallel actions in an attempt to prevent the sale of the home and enforcement of the federal court judgment. First, he brought an action in the Superior Court of New Jersey, Middlesex County, which was subsequently removed pursuant to 28 U.S.C. § 1442(a)(1). See Balice v. United States, Civ. No. 17-13601 (D.N.J.). The complaint was brought against the United States, the Attorney General, and two agents of the IRS, as well as myself. That case was assigned to Chief Judge Wolfson, who dismissed the complaint with prejudice based on sovereign and judicial immunity. The Third Circuit affirmed. Balice v. United States, 763 Fed.Appx. 154 (3d Cir. 2019).

         Thereafter, Balice filed a second complaint in state court, which was substantively identical to the first state-court complaint. This complaint was ultimately dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). Balice v. United States of America, Civ. No. 17-10291 (D.N.J.) (DE 11). He then filed for bankruptcy and sought to discharge the tax debt by filing a series of motions and an adversary proceeding. That case was dismissed without discharge. In re Balice, No. 17-32967 (Bankr. D.N.J. Nov. 13, 2017) (DE 68).

         On August 2, 2018, Mr. Balice filed a third state-court action, again attacking the basis of the underlying tax action. Balice v. United States of America, et al, Civ. No. 18-13560. That action reasserted the same allegations and claims which he pled in the first state-court complaint. It, too, was dismissed. Balice v. United States of America, et al, Civ. No. 18-13560 (DE 9).

         Balice and Ronald Ottavianno, as "Trustee" of the Rosewater Trust, now sue AVS for "unlawful invasion of the plaintiffs property." On October 23, 2018, Balice filed a complaint in the Superior Court of New Jersey, Middlesex County. The present complaint alleges that the execution of the judgment entered in the underlying tax collection action (which Balice refers to as a "foreign judgment") violated various New Jersey statues and the New Jersey Constitution. Balice seeks declaratory and injunctive relief "from the unlawful and violative invasion of plaintiffs private and personal property," "from the unlawful claims to the property being made by the defendant through an unregistered foreign process," and to prevent "any further or future claims" to the Metuchen property.

         Now before the Court are several motions: (1) the Government's motion to intervene and dismiss the now-removed complaint (DE 2); (2) Balice's motion to remand to New Jersey State Court (DE 4); and (3) Balice's motion for default against AVS (DE 12).

         Balice also seeks to "strike" (1) the Government's motion to intervene (DE 6); (2) the Government's opposition to Balice's motion to remand (DE 9); and (3) the Government's opposition to Balice's motion to strike (DE 11).

         For the foregoing reasons, Balice's motion to remand is granted. The remaining motions are administratively terminated as moot.

         II. Balice's Motion to Remand

         I first address the propriety of the Government's removal and this Court's jurisdiction. Balice seeks to remand this matter to state court for lack of subject matter jurisdiction and because the Government does not have "standing" to represent AVS. (DE 4). Balice argues that this matter does not involve the collection of revenue, but "only involves the enforcement of a federal court judgement." (DE 4, at 2).[2] Balice also provides general law on this Court's jurisdiction, the removal process, and dual sovereignty. (See generally DE 4). He contends that this case is not about the collection of revenue, but about the enforcement of a federal judgment, which he believes can only be done in State court. (DE 4, at 13-17, 19). To the contrary, however, are Federal Rule of Civil Procedure 70 (recognizing that federal court may enforce judgment for real property by "enter[ing] a judgment divesting any party's title and vesting [real or personal property] in others."), and Rule 64 (providing that "every remedy" that is available "under the law of the state where the court is located, . . . for seizing a person or property to secure satisfaction of the potential judgment" is also available in federal court).

         The Government contends that removal was proper under either 28 U.S.C. § 1442(a) or 1441(a). (DE 5, at 4-5). The Government dedicates less than two pages of its brief to removal under these provisions, providing little more than a citation to the statutes. (See id.).

         Balice's response, which he has styled a "motion to strike" (DE 9), points out that the Government is not a named defendant in the state complaint, and no longer has any interest in the property that has been sold and conveyed to AVS. (He also attacks the validity of that conveyance, however.)[3]

         I address each basis for removal in turn.

         A. Removal under §1441(a)

         The more commonly invoked provision for removal to federal court, 28 U.S.C. § 1441(a), provides that a defendant in a state court civil action may remove the case to federal court if the federal court would have original jurisdiction to hear the case. See 28 U.S.C. § 1441(a) ("any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." (emphasis added)); Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987).

         Applying the plain and unambiguous language of 28 U.S.C. § 1441(a), courts have held that only a named defendant may remove an action to federal court under this provision. See Sheppard v. Sheppard, 481 F.Supp.2d 345, 347-48 (D.N.J. 2007) ("The plain language of the statute clearly limits the right of removal to 'defendants.'. . .To interpret 'defendant' to include non-parties would produce an absurd result and would contravene more than 65 years of jurisprudence that has only allowed removal by 'defendants' to claims asserted by a plaintiff."); Gross v. Deberardinis, 722 F.Supp.2d 532, 534 (D. Del. 2010) ("Even assuming Local 1545 Pension Plan is the real-party-in-interest, the Court concludes that it is not a 'defendant' within the meaning of § 1441(a), and therefore, is not entitled to remove this action."); Smith v. St. Luke's Hosp., 480 F.Supp. 58, 61 (D.S.D. 1979) ("A holding that an intervenor-plaintiff can remove would be an unwarranted expansion of jurisdiction by use of [§ 1441]."); Kane v. Republica De Cuba, 211 F.Supp. 855, 856-58 (D.P.R. 1962) (holding that nonparty who did not intervene in state court action may not file for removal); Dep't of Fin. of Sussex Cnty. v. Polk Heirs, 2017 U.S. Dist. LEXIS 201176, at *4-5 (D. Del. Dec. 1, 2017) (finding removal improper under 1441(a) because removing party did "not have standing to remove this case. He is not a defendant nor an intervenor in the State action."); cf. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 103 (1941) (affirming Fifth Circuit decision that "the plaintiff in the state court was not a 'defendant' within the meaning of section 28 of the Judicial Code, and so was not entitled to remove the cause under that section.").[4]

         Title 28, U.S. Code, Section 1446, which outlines the procedure for removal under § 1441(a), confirms that the removing party must be a named defendant. Even if the Government or some other party deems itself a "real party in interest" in the underlying action, it still "may not remove or participate in the removal of a case" under § 1441. Gross, 722 F.Supp.2d at 534.[5]

         Here, the Government is not a named defendant in the state complaint. It therefore cannot seek removal under § 1441, even if it is the "real party in interest." Accordingly, removal under § 1441 is not authorized.

         B. Removal under ...

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