The opinion of the court was delivered by: CONNER
Plaintiff in the above-captioned action stakes its jurisdictional claims on the grounds of diversity and the purported existence of a federal question, coupled with an amount in controversy exceeding $10,000. Presently under consideration are defendants' motions to dismiss, pursuant to Rule 12(b)(1) and 12(b)(6) F.R.Civ.P., for absence of subject matter jurisdiction and for failure to state a claim upon which relief might be granted.
So far as is relevant herein, the facts, as recited in plaintiff's amended complaint, are as follows. Plaintiff, a Massachusetts corporation, was formerly a member of an "affiliated group," within the meaning of 26 U.S.C. § 1504, of which the corporate defendant (USI), organized under the laws of Delaware and having its principal place of business in New York, was common parent. Pursuant to the provisions of 26 U.S.C. § 1501, the USI group filed a consolidated federal income tax return for calendar year 1971; plaintiff has alleged that it paid, through the agency of USI, its own portion of the group's 1971 federal income tax liability, as allocated in accordance with 26 U.S.C. § 1552(a)(1).
Since May 1973, when USI sold its stock in plaintiff to a third corporation, plaintiff has been a member of another affiliated group. The latter, through its common parent corporation, filed a consolidated return for calendar year 1973, which reflected, inter alia, a net operating loss derived solely from plaintiff's 1973 operations and an unused investment credit attributable solely to plaintiff's costs of qualified investment. Plaintiff has filed with the Internal Revenue Service a claim for refund of monies paid on the USI group's 1971 consolidated tax, a claim based upon plaintiff's loss and credit carrybacks to 1971.
The instant action has its roots in Treasury Regulation § 1.1502-78(b), which, in pertinent part, provides that,
"where a loss is deducted from the consolidated taxable income or a credit is allowed in computing the consolidated tax liability for a consolidated return year, any refund shall be made directly to and in the name of the common parent corporation. The payment of any such refund shall discharge any liability of the Government with respect to such refund."
According to the amended complaint herein, "U.S.I. has asserted that [Treasury Regulation § 1.1502-78(b)] requires the payment of the Refund [claimed by plaintiff] to U.S.I. * * *." Contending that "any interpretation of the said regulation which requires payment of the Refund to U.S.I. is unreasonable, does not clearly reflect the income tax liability of the parties, renders the regulation arbitrary and capricious and is beyond the power of the Secretary [of the Treasury] or his delegate to prescribe," plaintiff seeks a judgment, pursuant to 28 U.S.C. § 2201, declaring that "the Refund" under contest "is the property of M & M" rather than that of USI and that it "is in equitable trust for M & M"; plaintiff further asks that the United States and USI be enjoined, the one from paying "the Refund," the other from receiving it, pending the determination of the present action.
The Government has launched its motion to dismiss by pressing the familiar principle that the United States may not be sued absent an effective waiver of its sovereign immunity. See, e.g., Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 93 L. Ed. 1628, 69 S. Ct. 1457 (1949); United States v. Shaw, 309 U.S. 495, 84 L. Ed. 888, 60 S. Ct. 659 (1940); United States v. U.S. Fidelity & Guaranty Co., 309 U.S. 506, 84 L. Ed. 894, 60 S. Ct. 653 (1940). Although it concedes that such a waiver has been effected with respect to proceedings for income tax refunds under 26 U.S.C. § 7422, and although it characterizes the instant action as no more nor less than a suit for recovery of taxes pursuant to that statute, the Government maintains that plaintiff's failure to satisfy the relevant strictures of 26 U.S.C. § 6532 disallows plaintiff's present claim from consideration in this forum. Plaintiff, for its part, acknowledges that it has not met at least one of the preconditions to suit under Section 7422.
Nonetheless, plaintiff argues strenuously that
"this is not a suit for refund of any tax. The Court is not being asked to review plaintiff's claim for refund or to determine the amount thereof. All that is being sought is a declaration of the rights of the parties to a specific property, the refund claim." Plaintiff's Brief in Opposition to Defendant [U.S.A.]'s Motion at 10.
The unhappy fact remains, however, that neither plaintiff's original complaint nor its complaint as amended makes any reference to such statutory allowances for federal subject matter jurisdiction and waiver of sovereign immunity as might render the United States amenable to this action. The absence of those references alone would be fatal to plaintiff's suit against the Government. See United States v. Alabama, 313 U.S. 274, 85 L. Ed. 1327, 61 S. Ct. 1011 (1941); United States v. Sherwood, 312 U.S. 584, 85 L. Ed. 1058, 61 S. Ct. 767 (1941); United States v. Shaw, supra. However, at least one of plaintiff's briefs on these motions indicates that plaintiff stands ready to amend its complaint anew if to do so would cure those deficiencies. In anticipation of a motion to amend, and thus in the interest of future judicial quietude, this Court is obliged to address plaintiff's argument that the Administrative Procedure Act (the APA), 5 U.S.C. § 701 et seq., supports plaintiff's maintenance of the present action against the Government.
Plaintiff has correctly observed that, at least under the authoritative rulings in our own Circuit, the APA "constitutes a waiver of sovereign immunity concerning those claims which come within its scope." Kletschka v. Driver, 411 F.2d 436, 445 (2d Cir. 1969); Kingsbrook Jewish Medical Center v. Richardson, 486 F.2d 663, 668 (2d Cir. 1973). But see Sierra Club v. Hickel, 467 F.2d 1048, 1054 (6th Cir. 1972), cert. denied, 411 U.S. 920, 93 S. Ct. 1545, 36 L. Ed. 2d 313 (1973); Littell v. Morton, 445 F.2d 1207, 1213 (4th Cir. 1971). Plaintiff is no less correct when it notes that the Treasury Regulation it would have this Court scrutinize constitutes a "final agency action" within the meaning of 5 U.S.C. § 704. See Toilet Goods Association, Inc. v. Gardner, 387 U.S. 158, 18 L. Ed. 2d 697, 87 S. Ct. 1520 (1967); Abbott Laboratories v. Gardner, 387 U.S. 136, 18 L. Ed. 2d 681, 87 S. Ct. 1507 (1967).
Having acknowledged so much, this Court must conclude nonetheless that plaintiff's reliance upon the APA is misplaced, for, with respect to the claims herein, plaintiff simply lacks standing to sue under that Act. Suits under the APA may be maintained only by persons "suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute * * *." 5 U.S.C. § 702. As explicated by the Supreme Court in United States v. SCRAP, 412 U.S. 669, 93 S. Ct. 2405, 37 L. Ed. 2d 254 (1973), and Sierra Club v. Morton, 405 U.S. 727, 31 L. Ed. 2d 636, 92 S. Ct. 1361 (1972), the above provision brings within the pale of APA standing only one who can allege both "that he has been or will in fact be perceptibly harmed by the challenged agency action," 412 U.S. at 688, and that the interest he seeks to vindicate is ...