order and preliminary injunctive relief and defendant's motion to dismiss. Plaintiff seeks to enjoin the Internal Revenue Service from proceeding with a forced sale of real property located at 4516 Cane Run Road, Louisville, Kentucky. Defendant contends that this court is without jurisdiction to hear this case. For the reasons discussed below, this court agrees.
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction
When reviewing the adequacy of a complaint for purposes of a Rule 12(b)(1) motion, "the complaint will be construed broadly and liberally." 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1350 (1990 & Supp. 1993). Plaintiff's factual allegations must be presumed true and liberally construed in favor of the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974). Therefore, a recitation of the undisputed facts of this case is in order.
Plaintiff, Jericho Painting and Special Coating, Inc., ("Jericho") is a small, family-owned painting contractor engaged in the commercial and government painting business for 40 years. In 1990, Jericho prepared an $ 850,000 bid estimate for sandblasting and painting of 15 miles of jet fuel petroleum pipeline serving Anderson Air Force Base in the United States Territory of Guam. Plf. Mem. Supp. Plf.'s Mot. T.R.O. & Prelim. Inj. at 1.
On or about September, 1990, a government contract was awarded to Kentucky Bridge and Dam Co., Inc., ("KB&D") as the general contractor in the amount of $ 1.2 million. Id. at 2. KB&D awarded the field sandblasting, vacuuming, stripping, and painting responsibilities under the contract to plaintiff. Work commenced on the project on or about February, 1991. Id.
The contract specified a total of 300 corrosive pits that would require specialized treatment for cleaning and filling in preparation of painting the 15 miles of pipeline. The government also speculated that 100 of these pits would be "fill welded and 200 would be epoxy cement filled depending upon the size of the oxidation pit." Id.
Upon receipt of the government contract specifications, Jericho anticipated a job requiring four months work with the use of sophisticated new equipment. However, numerous problems ensued, and by April 1991, it became apparent to Jericho "that the condition of the pipeline was significantly and materially different from that which was represented to it in the specifications." Id. In fact, a lengthy inspection period uncovered hundreds of thousands of rust pits, many of which had actually perforated the pipeline. Id. at 3. Jericho proceeded with the work pursuant to government orders that Jericho continue and provide a proposal for a change order increasing the contract amount. Jericho continued performance without payment until September 12, 1991 when Jericho could no longer finance the project.
On or about April 1992, the government issued a termination of the contract for convenience of the government. Id.
Numerous negotiations and lawsuits have ensued as a result of this contractual dispute.
In September 1991, plaintiff brought suit against KB&D in the United States District Court for the Territory of Guam, claiming compensatory damages in excess of $ 4 million.
Id. In addition, Jericho has filed a complaint in the United States Court of Federal Claims.
In October 1991, Jericho filed a $ 9.2 million claim for breach of contract and cardinal change with the Air Force. Id. at 4. The Air Force has not issued a contracting officer's final decision. However, the government has agreed to pay Jericho in accordance with a termination for convenience settlement proposal. A final negotiation was conducted at Anderson Air Force Base in August 1993, the contracting officer agreeing to $ 3.8 million. Id. The contracting officer has advised Jericho that it shall soon issue a contracting officer's final decision. Once the final decision is rendered, an invoice can be submitted for payment.
However, Jericho is presently broke as a result of the government's actions, and the Internal Revenue Service ("IRS") claims that Jericho owes $ 188,000 in taxes, interest, and penalties. In order to satisfy Jericho's unpaid federal taxes, the IRS planned the forced sale of the only asset Jericho was able to maintain during its dire financial situation created primarily by the nonpayment on the Air Force contract.
Id. at 5. Jericho's building is valued at $ 250,000.
Plaintiff does not assert that taxes are not owed. In fact, plaintiff even acknowledges the right of the IRS to conduct a sale of assets to recover unpaid taxes. Compl. at PP 31, 35. The IRS has been made aware of the contractual dispute with the Air Force and the forthcoming funds. Indeed, the IRS has filed a Notice of Levy with the Department of the Air Force indicating the amount due from the funds upon release to the contractor. However, the IRS refuses to wait for the final contracting officer approval of funds and wants to continue with the forced sale.
II. Anti-Injunction Act
Plaintiff seeks an injunction preventing the IRS from selling its building at public auction in order to satisfy the alleged assessment of overdue taxes. Jericho feels it is inequitable for one arm of the government to deprive Jericho of funds rightfully due it, while another arm seeks to sell Jericho's only asset for failure to pay taxes resulting from a dire financial condition resulting primarily from the government's own actions. Jericho would simply like a credit toward its taxes. Plaintiff contends that:
The attendant circumstances of the present case are such so as to create a narrow exception to [the Anti-Injunction Act]. Jericho does not seek to restrain or otherwise enjoin the defendant from the assessment and/or collection of taxes. It disputes the . . . sale at public auction of its building when other means are available. . . . The government has already in its possession sums sufficient to satisfy the indebtedness that are due and owing Jericho and is wrongfully withholding said sums. . . . The IRS has filed a lien for a portion of those sums so at such time as contract balances are paid over to the contractor, the tax debt shall be satisfied. . . . Under the present circumstances, the government is over-secured.