Unpublished Disposition, 893 F.2d 1338 (9th Cir. 1990)

In December of 1986, Martin Bischoff gave the United States notice that it claimed two attorneys' liens on Summit's judgment under Or.Rev.Stat. Sec. 87.450. The first claim was for services rendered in the Board litigation, and the second was for other services. Soon thereafter the Department of Agriculture notified Summit that it intended to offset the amount owed Summit, including the attorney fees, against a much larger amount Summit owed the government from previous defaults on timber sales contracts. Pursuant to 31 U.S.C. § 3716, and after responding to Summit's objections, defendant Michael Duffy, Assistant Regional Forester, did just this.

Martin Bischoff then filed a complaint in federal district court against the United States, seeking the total amount of its attorneys' liens. Martin Bischoff's complaint stated that " [t]his is a suit to foreclose attorneys' liens upon proceeds held by defendant. The court has jurisdiction by reason of 28 U.S.C. §§ 1331, 1361." Complaint at 1. Martin Bischoff alleged that its liens were "entitled to priority over the government's claim of offset." Complaint at 4.

The United States moved to dismiss Martin Bischoff's complaint pursuant to Fed. R. Civ. P. 12(b). The district court adopted the magistrate's recommendation to dismiss on the ground that the United States was immune from suit and that, contrary to Martin Bischoff's urgings, neither 28 U.S.C. § 2410 nor the Administrative Procedure Act (5 U.S.C. § 702) operated to waive that immunity. Martin Bischoff now appeals. We have jurisdiction of this appeal pursuant to 28 U.S.C. § 1291.

DISCUSSION

In the district court, Martin Bischoff asserted federal question subject matter jurisdiction under 28 U.S.C. § 1331.¹  The United States did not object to this basis for jurisdiction, and the district court did not decide whether section 1331 did indeed provide a basis for jurisdiction. "A federal appellate court may review subject matter jurisdiction even if [it is] not raised below." Smith v. Grimm, 534 F.2d 1346, 1349 n. 4 (9th Cir.), cert. denied, 429 U.S. 980 (1976). We do so now.

Section 1331 gives the district courts "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. The Supreme Court has explained this requirement as follows:

[I]n order for a claim to arise "under the Constitution, laws, or treaties of the United States," "a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action." The federal questions "must be disclosed upon the face of the complaint, unaided by the answer." Moreover, "the complaint itself will not avail as a basis of jurisdiction in so far as it goes beyond a statement of the plaintiff's cause of action and anticipates or replies to a probable defense."

Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 127-28 (1974) (per curiam) (citations omitted).

We discern no basis in Martin Bischoff's complaint for bringing this suit in federal court. The complaint is one to foreclose liens created under state law. As Martin Bischoff explains in its brief before this court, " [p]laintiff is not alleging that the government breached a contractual or statutory obligation or committed tortious conduct or any of the other conduct from which 'damages' naturally flow. Rather, plaintiff is asserting that, by filing its notice of lien in advance of the government's offset, it acquired prior interest in funds in the government's possession, and to which the government now claims title." Appellant's Brief at 10-11. Martin Bischoff's claim is dependent upon the law of the State of Oregon. True, Martin Bischoff sued the federal government. But this does not give the federal court subject matter jurisdiction. Rather, jurisdiction must be based on some federal statute or constitutional provision. Here, Martin Bischoff's claim does not arise under the Constitution, laws, or treaties of the United States.

Neither of the federal code sections relied on by Martin Bischoff as a basis for waiver of sovereign immunity provides a basis for federal court jurisdiction. We have previously held that 28 U.S.C. § 2410 does not confer federal subject matter jurisdiction. Shaw v. United States, 331 F.2d 493, 496 (9th Cir. 1964). Even if it did, the district court correctly concluded that section 2410 is simply inapplicable in cases like the present one, where the United States does not claim a mortgage or lien interest, but instead asserts a right to setoff. See Bertie's Apple Valley Farms v. United States, 476 F.2d 291, 292 (9th Cir. 1973) (per curiam); Bradley, Arant, Rose & White v. United States, 802 F.2d 1323, 1325 (11th Cir. 1986) (per curiam). Similarly, the Supreme Court has made it clear that section 702 of the Administrative Procedure Act is not an independent source of federal subject matter jurisdiction.²  Califano v. Sanders, 430 U.S. 99, 106-07 (1977).

Accordingly, we agree with the district court that Martin Bischoff's complaint should have been dismissed; but it should have been dismissed for lack of federal subject matter jurisdiction.

AFFIRMED.