Opinion
No. HHD-CV-08-5021419S
May 2, 2011
MEMORANDUM OF DECISION ON MOTION FOR SUMMARY JUDGMENT
FACTS
On July 16, 2008, the plaintiffs, J.P. Alexandre, LLC ("the LLC") and Yvon Alexandre, filed an eight-count complaint against the defendants, Louis O. Egbuna and Paul Greenfield. On August 24, 2009, the plaintiffs filed an amended and revised ten-count complaint, which remains operative to this day, wherein they allege the following facts.
In this memorandum of decision, plaintiffs Yvon Alexandre and the LLC will be referred to, collectively, as "the plaintiffs," and defendants Louis Egbuna and Paul Greenfield will be referred to, collectively, as "the defendants."
Plaintiff Alexandre does business as and is the sole owner of the plaintiff LLC, an entity which owns and operates a restaurant and nightclub in Hartford, Connecticut. The nightclub, now known as Vibz Uptown, sold alcohol and food items to its customers through the year 2005, of which the plaintiffs kept permanent records on so-called "Z reports." Z reports are printed summaries of daily cash transactions rather than printouts of original cash register receipts, which the plaintiffs did not retain. At all times relevant to this case, Alexandre filed quarterly state sales and use tax returns for the LLC with the State of Connecticut Department of Revenue Services ("DRS").
According to the plaintiffs, a Z report is a report that is "printed out from each cash register" and "disclos[es] all sales recorded during that shift." Amended and Revised Complaint, dated August 20, 2009, ¶ 13.
On or about December 5, 2001, defendant Egbuna, a revenue examiner with DRS, sent a notice to the plaintiffs, advising them that DRS intended to perform an audit of the LLC's sales and use tax obligations for the period from October 1, 1998 through September 30, 2001. Along with this notice, Egbuna sent Alexandre a consent form to extend the statute of limitations, which Alexandre signed and returned to DRS.
DRS commenced its audit of the LLC on December 20, 2001, but did not complete it until August 2005. In the interim, on or about February 24, 2004, defendant Egbuna completed a preliminary audit report, which showed a significant tax deficiency, plus interest and penalties, totaling $171,664.43. The preliminary audit report covered the time period from October 1, 1999 through December 31, 2002, which changed by one year the original time period for the audit of which the plaintiffs had been advised in DRS's original notice of audit. On May 12, 2004, Alexandre filed an objection to the preliminary audit report with DRS.
During the audit process, defendant Egbuna asked Alexandre to sign additional consent forms to waive the statute of limitations, without explaining to him the significance of the forms or advising him that he was not obligated to sign them. In April 2002, Alexandre signed such an additional consent form at Egbuna's request. In June 2005, however, when Egbuna asked him to sign yet another such form, Alexandre refused, instead filing a form AU-112T, wherein he purported to rescind his prior consents to waive the statute of limitations. In response to this refusal, defendant Greenfield, a tax unit manager at DRS, called Alexandre on July 14, 2005. Alexandre claims that, in that call, Greenfield "vituperatively and stridently disparaged" the plaintiffs, described the ongoing audit as a "fraud case," and accused them of cheating on their taxes. Greenfield allegedly warned Alexandre that, if the consent form were not signed, DRS would conclude the audit without further discussion or negotiation with him, and then would record a tax lien against the plaintiffs' assets before they had a chance to pursue an administrative appeal.
At the time, the fair market value of the property located at 3155 Main Street in Hartford was $1,500,000. Due to other encumbrances on the property, such as mortgages and liens, the remaining equity in the parcel was $1,173,278.
On or about August 8, 2005, defendant Egbuna released his final sales and use tax audit report, which covered the period from October 1, 1999 through March 31, 2005. The final report showed a tax deficiency of $155,536.77, plus interest of $60,322.74 and penalties, including a 25% fraud penalty, of $38,884.26, for a total assessment of $256,743.77. The final report did not state that the assessment was a jeopardy assessment.
Neither party clearly defines what the intent to evade penalty is, and neither party submitted the DRS guidelines as evidence. According to General Statutes § 12-415(d), "[w]hen it appears that any part of the deficiency for which a deficiency assessment is made is due to fraud or intent to evade the provisions of this chapter or regulations promulgated thereunder, there shall be imposed a penalty equal to twenty-five per cent of the amount of such deficiency assessment." It appears that, under DRS guidelines, a fraud or intent to evade penalty is applied when a taxpayer's records do not support the figures reported in the sales and use tax returns and the taxpayer's deficiency assessment exceeds a certain threshold. See Affidavit of Louis Egbuna p. 4; Affidavit of Paul Greenfield pp. 3-4.
The plaintiffs' tax deficiency assessment was billed as a jeopardy assessment, pursuant to General Statutes § 12-417, which provides, in relevant part: "(1) If the commissioner believes that the collection of any tax or any amount of tax required to be collected and paid to the state or of any assessment will be jeopardized by delay, the commissioner shall make an assessment of the tax or amount of tax required to be collected, noting that fact upon the assessment and serving written notice thereof . . . (2) The amount assessed is due and payable no later than the tenth day after service of the notice of assessment, unless on or before such tenth day the person against whom such assessment is made has obtained a stay of collection, as provided in subdivision (3) of this section. To the extent that collection has not been stayed, the commissioner may enforce collection of such tax by using the method provided in section 12-35 or by using any other method provided for in the general statutes relating to the enforced collection of taxes . . ."
"A jeopardy assessment has been defined as a special assessment under the U.S. income-tax laws levied to collect an alleged deficiency when the taxing officer believes that delay may jeopardize the collection of the claim. Webster's Third New International Dictionary, p. 1213. [It] is also defined as [w]henever proceedings to collect income tax for the current or the immediately preceding taxable year are or may be prejudiced or rendered ineffectual due to actions of a taxpayer who designs quickly to depart from the United States or remove his property or conceal himself or his property, or other such act the I.R.S. may immediately make a determination of tax for the current taxable year or for the preceding taxable year, or both, and that such tax is immediately due and payable." West's Tax Law Dictionary (2009 Ed.), p. 583 ". . . Both [definitions] are concerned with the ability of the taxpayer to interfere with or defeat the collection process of the tax collector." (Internal quotation marks omitted.) Alexandre v. Law, Superior Court, judicial district of New Britain, Tax Session, Docket No. CV 07 4015060 (March 17, 2009, Aronson, J.T.R.) ( 47 Conn. L. Rptr. 393), aff'd, Alexandre v. Commissioner of Revenue Services, No. 18417, slip op. (Conn. April 19, 2011).
In August 2005, a hearing was held at DRS, where the tax assessment was affirmed. Thereafter, on September 3, 2005, the plaintiffs filed an official protest of the assessment and requested a formal hearing thereon.
On December 13, 2005, defendant Greenfield authorized and DRS recorded tax liens upon the LLC's property at 3155 Main Street, Hartford, and upon Alexandre's personal property at 3171 Main Street, Hartford, in the aggregate amount of $262,965.25. On December 27, 2005, before a hearing could be scheduled on the plaintiffs' protest, DRS caused the plaintiffs to be served with a tax warrant. Following service of the tax warrant by a state marshal, the marshal began to harass Alexandre, demanding full payment of the tax deficiency assessment plus a marshal's fee of $15,777.92, which Alexandre refused to pay. On December 29, 2005, after continued threats and harassment, Alexandre finally paid the marshal $5,500.00.
On October 23, 2006, after the Commissioner's appellate division remanded Alexandre's appeal of the tax deficiency assessment to the examination division for reconsideration, the original deficiency amount of $155,536.77 was decreased to $94,690.22 and the 25% intent to evade penalty was decreased to a negligence penalty of 15%.
A review of the record reveals that, after the formal administrative hearing, DRS' appellate division remanded the deficiency assessment to the examination division for reconsideration. Alexandre v. Law, supra, Superior Court, Docket No. CV 07 4015060. The examination division reduced the tax deficiency amount to $60,846.55, and reduced the penalty to 15%. Id.; see also Affidavit of Yvon Alexandre p. 6. According to Greenfield's affidavit, the 15% penalty is a negligence penalty, and it replaced the 25% fraud or intent to evade penalty. See Affidavit of Paul Greenfield pp. 5-6.
Alexandre subsequently appealed DRS' final tax deficiency assessment to the Superior Court pursuant to General Statutes § 12-422. See Alexandre v. Law, Superior Court, judicial district of New Britain, Tax Session, Docket No. CV 07 4015060 (March 17, 2009, Aronson, J.T.R.) ( 47 Conn. L. Rptr. 393), aff'd, Alexandre v. Commissioner of Revenue Services, No. 18417, slip op. at 4 (Conn. April 19, 2011) Alexandre claimed in his appeal that DRS had erred by concluding that his failure to keep and maintain original cash register tapes instead of Z-slips for the audit period violated agency regulations and deprived the auditor of the ability to verify the business's sales activity. He also claimed that the jeopardy assessment initially imposed against him had been improperly issued.
Both parties attached the trial court's memorandum of decision in Alexandre v. Law to their memoranda of law.
The trial court affirmed DRS' conclusion that the original cash register tapes were necessary to conduct a proper audit of the LLC, and that Alexandre was required to maintain such tapes for audit purposes under General Statutes §§ 12-426(3), 12-145(a) and the Regulations of Connecticut State Agencies § 12-2-12(b). The trial court also concluded, however, that there was no reasonable basis in the record for the jeopardy assessment under General Statutes § 12-417(1), because there was evidence that Alexandre contemplated removing assets from the jurisdiction before he paid his taxes or that the process of collecting such taxes would otherwise be delayed or impaired. In reaching this conclusion, the Court relied both upon the decreased penalty percentage and the decreased tax deficiency amount that had been assessed by the DRS upon reconsideration of the original tax assessment and upon Alexandre's civic ties to the community and substantial fixed assets. The Court thus vacated the 15% negligence penalty and ordered that the $15,777.92 marshal's fee be removed from the final assessment. Alexandre v. Law, supra, Superior Court, Docket No. CV 07 4015060.
General Statutes § 12-417(1) provides, in relevant part: "If the commissioner believes that the collection of any tax or any amount of tax required to be collected and paid to the state or of any assessment will be jeopardized by delay, the commissioner shall make an assessment of the tax or amount of tax required to be collected, noting that fact upon the assessment and serving written notice thereof . . ."
The Connecticut Supreme Court subsequently affirmed the trial court's decision on Alexandre's later appeal. Alexandre v. Law, supra, Superior Court, Docket No. CV 07 4015060; Alexandre v. Commissioner of Revenue Services, supra, No. 18417, slip op. at 6, 9. In so doing, it agreed with the trial court that DRS had properly used alternative auditing methodologies to determine the amount of the plaintiffs' tax deficiency because the inadequacy of the LLC's records had made it impossible for defendant Egbuna to reconcile discrepancies in those records. Alexandre v. Commissioner of Revenue Services, supra, No. 18417, slip op. at 10, 15 n. 10.
General Statutes § 12-426(3) provides, in relevant part as follows: "Records. (A) Every seller, every retailer as defined in subparagraph (B) of subdivision (12) of section 12-407 and every person storing, accepting, consuming or otherwise using in this state services or tangible personal property purchased from a retailer shall keep such records, receipts, invoices and other pertinent papers in such form as the commissioner requires."
General Statutes § 12-415(a) provides, in relevant part, as follows: "Deficiency Assessments. if the commissioner is not satisfied with the return or returns of the tax or the amount of tax required to be paid to the state by any person, the commissioner may compute and assess the amount required to be paid upon the basis of the facts contained in the return or returns or upon the basis of any information which is in or that may come into the commissioner's possession."
Section 12-2-12(b) of the Regulations of Connecticut State Agencies provides, in relevant part as follows: "(1) A taxpayer shall maintain all records necessary to a determination of correct tax liability under the affected tax law provisions. All required records shall be made available upon request by the commissioner. Such records include, but are not limited to: sales receipts, cash register tapes . . .
(2) Failure to maintain such records will be considered evidence of negligence or intentional disregard of law or regulation and may, without more, result in the imposition of appropriate penalties."
On appeal, Alexandre further argued that the trial court had erred by failing to order that the entire tax lien be removed due to the illegality of the jeopardy assessment. Our Supreme Court declined to consider the issue because the plaintiff had not requested such relief before the trial court. Alexandre v. Commissioner of Revenue Services, supra, No. 18417, slip op. at 10. The Court found that the plaintiff had failed to file any postjudgment motions for reconsideration or articulation after filing the appeal, and had failed to file an application for discharge of the lien pursuant to General Statutes § 49-51(a). On that basis, it concluded that this claim had been raised for the first time on appeal. Alexandre v. Commissioner of Revenue Services, supra, No. 18417, slip op. at 18.
In counts one, three, four, five, six, seven and eight of their operative complaint, the plaintiffs seek damages from defendant Egbuna personally, based upon his alleged actions in conducting the audit, as aforesaid, under the following theories of liability. In count one, they seek damages on a common-law claim of wanton, malicious and reckless misconduct. In counts three and four, they seek damages under 42 U.S.C. § 1983, for alleged violation, under color of state law, of their rights under the equal protection clause of the fourteenth amendment to the United States Constitution. In counts five and six, they seek damages from him for alleged violation of their equal protection rights under article first, section 20 of the Constitution of Connecticut. In counts seven and eight, they seek damages from him under 42 U.S.C. § 1983, for alleged violation, under color of state law, of their rights under the due process clause of the fourteenth amendment to the United States Constitution.
In count two of the operative complaint, the plaintiffs seek damages from defendant Greenfield, based upon his above-described conduct, for alleged intentional infliction of emotional distress.
Finally, in counts nine and ten of the operative complaint, the plaintiffs seek damages from both defendants, as follows: in count nine, on a common-law claim of civil conspiracy; and in count ten, on a federal statutory claim, pursuant to 42 U.S.C. § 1985(3), of civil conspiracy to violate their civil rights under color of state law.
On September 4, 2009, the defendants answered the operative complaint by denying all claims of liability against them and interposing three special defenses. As their first special defense, they pleaded that res judicata and collateral estoppel bar the plaintiffs' claims because such claims have already been decided against them in Alexandre v. Law. As their second special defense, they pleaded that "qualified good-faith immunity" bars the plaintiffs' claims because, in acting as alleged, they carried out their duties as DRS employees in good faith. Finally, as their third special defense, they pleaded that the plaintiffs' claims are barred by General Statutes §§ 4-141, 4-164, and 4-165 because, when engaging in their challenged conduct, they did not act either outside the scope of their employment or in a malicious, reckless or wanton manner.
The defendants filed a motion for summary judgment on September 24, 2010. In support of their motion, they submitted, inter alia, personal affidavits from defendants Egbuna and Greenfield and an affidavit from Bruce Innes, a supervisor at DRS. In Egbuna's affidavit, he averred that his job duties in the relevant time frame included the preparation of tax deficiency assessments based upon documents he received during audits and that he invariably followed DRS guidelines to determine whether any interest or penalties were to be applied to such assessments. He also stated that he had no authority or responsibility for deciding either how a deficiency assessment would be billed or collected by DRS or whether to bill a deficiency assessment as a jeopardy assessment. He further stated that, during the audit here at issue, he requested certain business records from the plaintiffs, but that the records they produced were inadequate, which prolonged the audit. He stated that the 25% intent to evade penalty originally imposed upon the plaintiffs was applied to them pursuant to DRS guidelines, which required the imposition of such a penalty whenever a taxpayer's records failed to support the figures reported on its sales and use tax returns and the amount of its deficiency exceeded a particular threshold. He further averred that during the subject audit, Alexandre's race, ethnicity and national origin were never considered in applying an intent to evade penalty to him. Egbuna concluded his affidavit by stating that he had played no role in reducing the intent to evade penalty on the revised assessment.
In defendant Greenfield's affidavit, he stated that his job responsibilities in the relevant time period included reviewing and approving completed audits and submitting a prescribed DRS form whenever a tax deficiency assessment was to be processed as a jeopardy assessment. He stated that he applied DRS guidelines to determine if a jeopardy assessment was required, and his supervisor had to approve any jeopardy assessment form he prepared and submitted. He stated that he did not play any role in determining how DRS billed and collected a jeopardy assessment. He explained that an intent to evade penalty was required under DRS guidelines whenever a deficiency assessment exceeded a certain threshold amount and the taxpayer's records failed to support the figures reported on its sales and use tax returns. He also explained that DRS guidelines required him to submit a jeopardy assessment request form, form AU391, whenever an intent to evade penalty was assessed, that DRS billed and collected such assessments pursuant to DRS guidelines, and that he did not play any role in the billing and collection process. Greenfield stated that the intent to evade penalty assessed in this case was not connected to Alexandre's refusal to sign the statute of limitations consent form. He explained that the reduction in the intent to evade penalty from 25% to a 15% negligence penalty was based upon a miscommunication between himself and the plaintiffs' lawyer, which incorrectly caused him to believe that Alexandre had agreed to accept a revised assessment if the penalty were reduced. He explained that the intent to evade penalty would not have been reduced to a negligence penalty without that miscommunication, because the deficiency assessment amount met the threshold required for the penalty under DRS guidelines and Alexandre had failed to produce adequate records to support the figures that the LLC had reported to DRS in its sales and use tax returns.
In Innes' affidavit, he stated that he directly supervises DRS tax unit managers, including defendant Greenfield, although at the time of the audit he was not in that position. He stated that DRS guidelines and policies for liquor and restaurant audits require tax assessments called for a 25% intent to evade penalty in assessments such as the LLCs, and that pursuant to DRS guidelines, any tax deficiency which includes an intent to evade penalty must be billed as a jeopardy assessment. Innes further averred that defendant Greenfield was required under DRS guidelines to submit the jeopardy assessment request form, which had to be approved by a supervisor. He concluded by stating that all approved jeopardy assessments are sent to the DRS audit division control unit for processing.
On October 29, 2010, the plaintiffs filed a memorandum in opposition to the defendants' motion for summary judgment. The plaintiffs submitted, inter alia, Alexandre's personal affidavit in support of their arguments. Alexandre's affidavit essentially repeats the facts alleged in the plaintiffs' operative complaint and states that he provided defendant Egbuna with records of the LLC's business whenever he was requested to do so.
On November 23, 2010, the defendants filed a reply memorandum. The Court heard this matter at the short calendar on December 6, 2010. Thereafter, with the Court's permission, the plaintiffs filed a supplemental memorandum in opposition on December 30, 2010, and the defendants filed a supplemental brief in support of their motion on January 3, 2011.
ANALYSIS
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law." (Internal quotation marks omitted.) Weiss v. Weiss, 297 Conn. 446, 457, 998 A.2d 766 (2010).
"A material fact is a fact that will make a difference in the outcome of the case . . . Once the moving party has presented evidence in support of [its] motion for summary judgment, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court." (Internal quotation marks omitted.) Byrne v. Burke, 112 Conn.App. 262, 267-68, 962 A.2d 825, cert. denied, 290 Conn. 923, 966 A.2d 235 (2009).
"As the party moving for summary judgment, the [movant] is required to support its motion with supporting documentation, including affidavits." Heyman Associates No. 1 v. Ins. Co. of Pennsylvania, 231 Conn. 756, 796, 653 A.2d 122 (1995). Likewise, "[t]he existence of the genuine issue of material fact must be demonstrated by counteraffidavits and concrete evidence." (Internal quotation marks omitted.) Gianetti v. Health Net of Connecticut, Inc., 116 Conn.App. 459, 465, 976 A.2d 23 (2009).
I SUBJECT MATTER JURISDICTION OVER TAXPAYER LAWSUITS FOR MONEY DAMAGES
The defendants first argue that this Court lacks subject-matter jurisdiction over any of the plaintiffs' pending claims because all such claims arise from and concern the levying and collection of state sales and use taxes, for which the State has provided an exclusive and fully adequate legal remedy, by way of a statutory appeal to this Court from any sales and use tax assessment in General Statutes § 12-422. Under Section 12-422, the Court is authorized not only to reject or modify any unlawful sales and use tax assessment, but to grant such other relief "as may be equitable." With respect to the plaintiffs' state law claims, the defendants argue that the legislature's creation of this limited, albeit flexible, statutory remedy constituted a limited waiver of the States' sovereign immunity, beyond or outside of which, absent other statutory authority, this Court is not empowered to grant any other type of legal or equitable relief based upon the allegedly improper levying or collection of state sales and use taxes. With respect to the plaintiff's federal claims, the defendants argue that the existence of such an adequate state remedy bars those claims under principles of comity, as repeatedly articulated in controlling state and federal case law. The plaintiffs reject the foregoing arguments based principally upon the contention that the relief they seek in this lawsuit is not available to them under Section 12-422 and, in any event, that the case law relied upon by the defendants is inapplicable to their present claims.
In support of its argument that the statutory remedy of appeal from a sales and use tax assessment, pursuant to Section 12-422, is an exclusive remedy for persons aggrieved by the levying or collection of sales and use taxes, the defendants rely in part on this Court's decision in Blass v. Rite Aid of Connecticut, 51 Conn.Sup. 622 (2009) [ 48 Conn. L. Rptr. 217], aff'd, 127 Conn.App. 569 (2011), which our Appellate Court recently affirmed and adopted as its own. In that case, where the plaintiff consumer had sued the defendant retailer to recover money damages, including attorneys fees, under the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., for alleged overcollection of sales tax, this Court dismissed her claim for failure to exhaust administrative remedies for failure to take a statutory appeal under Section 12-422. In reaching that result, this Court determined that the statutory remedy made available to consumers under Section 12-422 was intended by the legislature to be the exclusive remedy for the miscollection of sales tax, because it is part of a comprehensive statutory scheme regulating the levying and collection of sales taxes that gives it preferred status on the Court's docket and provides no other statutory remedy. The Court also determined that that exclusive remedy was neither futile nor inadequate to redress the plaintiff's grievances because it expressly authorizes both the refund of any miscollected taxes and the ordering of any other relief that "may be equitable." For that reason, although certain legal remedies made available under CUTPA are made available under Section 12-422, equivalent remedies necessary to redress injustices occasioned by the miscollection of sales tax may be sought and granted on such an appeal, if and to the extent that equity demands them. Therefore, any person seeking legal or equitable relief in connection with the levying or connection of sales taxes from or against him must pursue such relief, if at all, in an appeal under Section 12-422.
The plaintiffs protest the limitation of their right to seek relief in this manner for essentially the same reasons as those which were advanced by the plaintiff in Blass, to wit: that the remedies they seek herein are for process costs associated with or arising out of the manner in which the defendants allegedly calculated their tax deficiency assessment and encumbered their property to enforce that assessment, not merely for a reduction or a refund of their misbilled or miscollected taxes. A remedy for such conduct should assertedly be extended to them by implication under the Taxpayer Bill of Rights, as set forth in Section 12-39n of the General Statutes, whose spirit was allegedly violated by the manner in which the defendants conducted their audit and sought to enforce the resulting tax assessment against them. The problems with these arguments, simply stated, are as follows.
On the first point, this Court has already noted that the language of Section 12-422 does not limit the relief available on an appeal under Section 12-422 to the refund of improperly billed and collected taxes. In fact, as the plaintiffs themselves have demonstrated in the course of pursuing their appeal under Section 12-422, the relief available thereunder includes equitable relief, such as that which the trial court awarded them, to wit: the wholesale elimination of their negligence penalty and the refund of the state marshal's fee which had lawfully been incurred for service the commissioner's tax warrant upon them. The remedy available under Section 12-422 is thus demonstrably broad and flexible enough to afford them relief similar, if not completely identical to, that which they wish to seek in this action. On the latter point, moreover, there is simply nothing in the Taxpayer Bill of Rights that creates or authorizes the kind of legal claim or cause of action which the plaintiffs urge this Court to recognize. Had it been the intent of the legislature to create or authorize such a claim or cause of action it could easily have done so in the text of the statute, such as by amending the scope and substance of Section 12-422 or by expressly establishing a new and different statutory remedy. As the plaintiffs candidly admit, however, the legislature did no such thing. It ill behooves this Court to rewrite statutes on the theory that the legislature implicitly intended that they be so construed. For these reasons, this Court is persuaded that the plaintiffs' state claims must fail because their only lawful remedy is a statutory appeal under Section 12-422. By failing to seek such relief on appeal, the plaintiffs have failed to exhaust their administrative remedies, and thus have deprived this court of subject matter jurisdiction over their present state law claims. Accordingly, counts one, two, five, six and nine of the plaintiffs' operative complaint must be dismissed because they seek relief, in connection with the assessment, levying and/or collection of state sales and use taxes, which is outside the limited scope of Section 12-422, and thus beyond the subject-matter jurisdiction of this Court.
With respect to the plaintiffs' federal claims, of course, there is no requirement that the plaintiffs exhaust their state administrative remedies before asserting such claims. Even so, it has long been held, as a matter of comity, that a party has no right to bring a federal statutory action under 42 U.S.C. § 1983 for alleged violation of his federal constitutional rights in connection with a state's collection of taxes if the party has an adequate legal remedy for the claimed violation under state law. Zizka v. Water Pollution Control Authority, 195 Conn. 682, 490 A.2d 509 (1995) (affirming the trial court's dismissal of a § 1983 action for money damages in connection with a town sewer assessment due to the existence of a plain, speedy and efficient statutory remedy for the claimed violation in state court); Jade Aircraft Sales, Inc. v. Crystal, 236 Conn. 701, 708, 674 A.2d 834 (1996) (agreeing with Zizka that, if an adequate remedy exists at law for challenging a state tax assessment, state courts do not have jurisdiction to entertain a federal constitutional challenge to such an assessment under § 1983). The Jade Aircraft Court, moreover, clarified that the adequacy of a state's legal remedy, for the purpose of barring its courts from exercising jurisdiction over a § 1983 action based upon alleged constitutional violations in the assessment, levying or collection of state taxes, is not undermined by any inconsistency between the particular relief made available to one pursuing that remedy and those made available under § 1983. It thus rejected the plaintiff's claim in the case before it that the unavailability of money damages or attorneys fees under Section 12-422 made the remedy set forth therein inadequate to bar the plaintiff's claim under § 1983. On that score, it took special note, as did this Court in its Blass decision, of the trial court's power under Section 12-422 to grant both legal relief from any improper assessment of taxes and such other relief "as may be equitable." Accord, Zizka, supra at 683.
For all of the foregoing reasons, a plaintiff against whom sales and use taxes have been misbilled or miscollected in Connecticut does have an adequate legal remedy to review alleged unconstitutional conduct by state agents in the assessment, levying and/or collection of such taxes under Section 12-422, and thus a federal statutory action seeking damages in connection with such conduct is beyond the subject-matter jurisdiction of this Court. Accordingly, since counts three, four, seven, eight of the plaintiffs' operative complaint, which assert violations of 42 U.S.C. § 1983, and count ten of that complaint, which asserts a violation of 42 U.S.C. § 1985, all involve federal statutory claims of unconstitutional conduct in the assessment, levying and/or collection of state sales and use taxes, must be dismissed for lack of subject-matter jurisdiction.
II QUALIFIED IMMUNITY
The defendants next argue, as a fallback position to their initial jurisdictional challenge described in Part I of this Memorandum of Decision, supra, that they are entitled to qualified immunity as to each and every count of the operative complaint. Although it is not necessary to reach these claims — which are subject to separate and distinct analysis as to the plaintiffs' state and federal law claims — the Court will discuss those claims as follows in the event that a reviewing court disagrees with its foregoing jurisdictional analysis.
A State Claims
The defendants claim that they are entitled to qualified immunity with respect to the plaintiffs' state law claims against them under General Statutes § 4-165 because they are state employees who, at all times relevant to such claims, were acting within the scope of their employment duties. They argue that the plaintiffs have failed to demonstrate that they acted maliciously, wantonly or recklessly, and thus have failed to raise a genuine issue of material fact as to their entitlement to statutory immunity. In support of their arguments, the defendants have submitted numerous exhibits, including excerpts from their own depositions, a personal affidavit from each defendant, and an affidavit from Bruce Innes, defendant Greenfield's supervisor.
The plaintiffs argue that to show wanton, reckless or malicious behavior, they must demonstrate that the defendants acted with a reckless disregard for the just rights of others or for the consequences of their actions. The plaintiffs contend that they have presented evidence of such reckless behavior, and, in fact, have amply demonstrated that the defendants intentionally disregarded the plaintiffs' just rights and the consequences of their actions. They maintain that defendant Egbuna (1) intentionally failed to adequately investigate the business status and position of the plaintiffs before he assessed the `intent to evade' penalty against them, (2) refused to allow the plaintiffs the opportunity to participate in alternative tax collection proceedings and (3) took more than three years to complete the audit, thereby demonstrating a reckless disregard for the just rights of the plaintiffs. Such proof, they claim, more than adequately meets their obligation to put the defendants' recklessness in issue.
The plaintiffs also argue that defendant Greenfield's culpable state of mind is amply demonstrated by (1) his failure to conduct an investigation prior to approving the `intent to evade' penalty, (2) his execution and submission of the form AU-391 and (3) his intentional implementation of the jeopardy assessment, all of which allegedly show a reckless disregard for the requirements in § 12-417 and § 12-39n and for the plaintiffs' rights. They maintain that Greenfield violated § 12-417 because that statute requires a belief by the commissioner that collection of the tax will be jeopardized before a jeopardy assessment may be made. They rely on the trial court's holding on appeal, in Alexandre v. Law, that the jeopardy assessment was incorrectly utilized against them because there was no basis for a reasonable belief that the plaintiffs would not pay the tax assessment. The plaintiffs argue that this holding demonstrates Greenfield's violation of § 12-417 and his reckless disregard for controlling statutory requirements and the plaintiffs' rights. In support of their arguments, the plaintiffs submitted, inter alia, excerpts from the defendants' depositions, Alexandre's personal affidavit, the target count report, the jeopardy assessment form AU-391, and the trial court's memorandum of decision in Alexandre v. Law.
"Claims involving the doctrines of common-law sovereign immunity and statutory immunity, pursuant to [General Statutes] § 4-165, implicate the court's subject matter jurisdiction." (Internal quotation marks omitted.) Kelly v. Albertsen, 114 Conn.App. 600, 605, 970 A.2d 787 (2009). With regard to common-law sovereign immunity, our Supreme Court has explained that "[w]e have long recognized the validity of the common-law principle that the state cannot be sued without its consent . . . We have also recognized that because the state can act only through its officers and agents, a suit against a state officer concerning a matter in which the officer represents the state is, in effect, against the state . . . Because an action against state employees in their official capacities is, in effect, an action against the state, the only immunity that can apply is the immunity claimed by the state itself — sovereign immunity." (Citations omitted; internal quotation marks omitted.) Miller v. Egan, 265 Conn. 301, 313-14, 828 A.2d 549 (2003).
The present case purports to be against the defendants in their individual capacities, and therefore statutory qualified immunity applies, not common-law sovereign immunity. See Martin v. Brady, 261 Conn. 372, 374, 802 A.2d 814 (2002) (when state officers are sued in their individual capacities, sovereign immunity does not apply). General Statutes § 4-165, which grants qualified immunity to state officers and employees, provides in relevant part as follows: "No state officer or employee shall be personally liable for damage or injury, not wanton, reckless or malicious, caused in the discharge of his duties or within the scope of his employment. Any person having a complaint for such damage or injury shall present it as a claim against the state under the provisions of this chapter."
"[S]tate employees may not be held personally liable for their negligent actions performed within the scope of their employment. This provision of statutory immunity to state employees has a twofold purpose. First, the legislature sought to avoid placing a burden upon state employment. Second, § 4-165 makes clear that the remedy available to plaintiffs who have suffered harm from the negligent actions of a state employee who acted in the scope of his or her employment must bring a claim against the state . . . State employees do not, however, have statutory immunity for wanton, reckless or malicious actions, or for actions not performed within the scope of their employment. For those actions, they may be held personally liable, and a plaintiff who has been injured by such actions is free to bring an action against the individual employee." Miller v. Egan, supra, 265 Conn. 319. Constitutional claims against state officers are also subject to statutory qualified immunity. See Martin v. Brady, supra, 261 Conn. 374 (plaintiff claimed, inter alia, that state constitutional rights violated; court held that statutory qualified immunity barred claims).
"A showing that officers acted with malice such that they are not entitled to qualified immunity is a heavy burden. Mere negligence is not enough . . . For example, in Mulligan v. Rioux, [ 229 Conn. 716, 731-33, 643 A.2d 1226 (1994)], th[e] court concluded that a jury finding that the defendant officials had engaged in malicious prosecution satisfied the test for this exception to qualified immunity. The court reasoned that, because the jury had found on the malicious prosecution claim that the defendants had acted primarily for an improper purpose; that is, for a purpose other than that of securing the proper adjudication of the claim on which [the proceedings] are based, the malice exception to qualified immunity also was satisfied." (Citation omitted; internal quotation marks omitted.) Fleming v. Bridgeport, 284 Conn. 502, 535-36, 935 A.2d 126 (2007).
For conduct to rise to the level of wantonness, recklessness or maliciousness, our Supreme Court has required that it be "more than negligence, more than gross negligence." Martin v. Brady, supra, 261 Conn. 379. It must be behavior that indicates "the existence of a state of consciousness with reference to the consequences of one's acts . . . and reckless disregard of the rights of safety of others or of the consequences of the action." (Internal quotation marks omitted.) Id., 379. Notably, when "an official has acted in excess of his or her authority [it] may suffice to prove that the conduct was wanton, reckless or malicious." Id., 379. "A wilful or malicious injury is one caused by design. Wilfulness and malice alike import intent . . . [Its] characteristic element is the design to injure, either actually entertained or to be implied from the conduct and circumstances." (Internal quotation marks omitted.) Rogers v. Doody, 119 Conn. 532, 534-35, CT Page 10535 178 A. 51 (1935). Reckless conduct, on the other hand, requires the actor to recognize "that his conduct involves a risk substantially greater . . . than that which is necessary to make his conduct negligent." Id. "[E]ven with respect to questions of motive, intent and good faith, the party opposing summary judgment must present a factual predicate for his argument in order to raise a genuine issue of fact." Wadia Enterprises, Inc. v. Hirschfeld, 224 Conn. 240, 250, 618 A.2d 506 (1992).
In the present case, there is no dispute that the defendants' alleged misconduct is claimed to have occurred during the discharge of their official duties as employees of DRS. See Operative Complaint, ¶¶ 3, 4, 15, 16, 19, 23, 25, 32. The plaintiffs do not argue that the defendants acted outside of the scope of their duties. Therefore, the Court must determine whether the claims against the defendants survive the motion for summary judgment based upon evidence raising a genuine issue of material fact that their complained-of conduct constituted malicious, wanton or reckless behavior.
1 Count One: Claim of Wanton, Reckless or Malicious Misconduct Against Defendant Egbuna
In count one of their operative complaint, the plaintiffs allege that defendant Egbuna's behavior was malicious, reckless or wanton because he (1) intentionally issued a tax deficiency without a reasonable basis; (2) intentionally recorded tax liens against the plaintiffs' property without a reasonable basis; (3) intentionally ignored the plaintiffs' reports and records when drafting the tax deficiency and jeopardy assessment; (4) intentionally and wrongfully applied industry standard drink prices and certain other calculations, and ignored the plaintiffs' actual prices and sales when he drafted the tax deficiency and jeopardy assessment; (5) intentionally and maliciously used incorrect serving sizes and yields in his calculations when he drafted the tax deficiency and jeopardy assessment; (6) intentionally and maliciously disallowed the plaintiffs the opportunity to participate in alternate collection proceedings, in violation of General Statutes § 12-39n(6); (7) intentionally and maliciously refused to allow the plaintiffs the right to participate in an immediate review of the jeopardy assessment, in violation of § 12-39n(6); and (8) intentionally and maliciously refused to complete the tax audit in a timely and expeditious manner, in violation of § 12-39n(11). In its opposition memorandum, the plaintiffs argue that Egbuna intentionally failed to conduct an adequate investigation into the business status and position of the LLC before he assessed the intent to evade penalty and refused to allow the plaintiffs the opportunity to participate in alternative tax collection proceedings.
The defendants' evidence, presented through their personal affidavits, their deposition testimony, and the affidavit of Mr. Innes, clearly tend to establish that Egbuna acted in good faith and in accordance with DRS guidelines, practices and procedures when conducting the tax audit at issue in this case. See Deposition of Egbuna, June 28, 2010, pp. 94, 153, 160-61, 183; Deposition of Greenfield, July 1, 2010, pp. 70, 61, 105, 164; Affidavit of Egbuna; Affidavit of Greenfield; Affidavit of Bruce Innes. Such evidence also clearly demonstrates that defendant Egbuna played no role at all in determining how the deficiency assessment would be billed or collected, and thus had no control over imposing tax liens on the plaintiffs' properties. Additionally, the Supreme Court has already resolved the plaintiffs' claims against defendant Egbuna concerning his use of the alternative auditing methodologies, such as applying industry standard drink prices, to calculate the amount of the LLC's tax deficiency. See Alexandre v. Commissioner of Revenue Services, supra, No. 18417, slip op. at 12. The Court thus has no need to revisit those issues here.
As the defendants have produced evidence that defendant Egbuna acted in good faith, the burden shifts to the plaintiffs to present evidence raising a genuine issue of material fact as to (a) whether defendant Egbuna did in fact follow the DRS guidelines in calculating the subject tax deficiency, or (b) that he otherwise acted with malice, recklessness or wantonness when engaging in the conduct alleged against him. See Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10-11, 938 A.2d 576 (2008). The evidence submitted by the plaintiffs fails to raise any such genuine issue of material fact. Alexandre's personal affidavit at most suggests that defendant Egbuna did a poor job in completing the audit, such as by failing to review certain documents during one of his meetings with Alexandre and by taking too long to complete the audit. However, there is no evidence in the affidavit to suggest that defendant Egbuna ever failed to follow DRS guidelines, practices or procedures in conducting the audit or acted with malice, recklessness or wantonness in that process. Likewise, the plaintiffs' other evidence, including the defendants' and Innes' depositions, fails to raise any genuine issue of material fact as to Egbuna's denial that he acted with alleged malice, recklessness or wantonness in completing the audit. To the contrary, the evidence demonstrates, without contradiction, that he was, in fact, following the DRS guidelines, practices and procedures throughout. The target count report demonstrates the increase in time required for completion of the audit. As explained by Egbuna in his deposition, this resulted directly from Alexandre's failure to provide suitable documentation to complete the audit within the time allowed by law. See Egbuna Deposition, pp. 175-83. Such testimony does not raise a genuine issue of material fact as to Egbuna's alleged malice or recklessness.
The remaining claims are that defendant Egbuna wrongfully and maliciously imposed the deficiency assessment and the jeopardy assessment, refused to allow the plaintiffs the opportunity to participate in alternative collection procedures or a hearing prior to the jeopardy assessment, and failed to conduct the audit in a timely manner.
The AU-391 form, moreover, demonstrates that defendant Greenfield filed the jeopardy collection request because, pursuant to DRS fraud guidelines, he believed that intent to evade cases were always to be processed as jeopardy assessments. Further, the deposition testimony and affidavits make it clear without contradiction that defendant Egbuna was not responsible for (1) the investigation of risks in collecting tax assessments, (2) the billing of tax assessments or (3) collection efforts by DRS. See Greenfield Deposition, p. 106; Affidavit of Greenfield; Affidavit of Egbuna; Affidavit of Innes. The plaintiff also did not refute the defendants' demonstration that the length of time used to complete the audit was made necessary by the inadequacy of the records produced by the plaintiffs. Defendant Egbuna stated in his affidavit and deposition testimony that he followed DRS guidelines, practices and procedures when conducting the audit, and that the extra time needed to complete the audit was due to Alexandre's failure to provide adequate records for that purpose. Accordingly, the plaintiffs have failed to raise a genuine issue of material fact that defendant Egbuna violated DRS guidelines or policies or otherwise acted maliciously or recklessly in imposing the deficiency assessment, failing to conduct the audit in a timely manner, or imposing the intent to evade penalty.
With regard to the claim that defendant Egbuna refused to allow the plaintiffs to participate in alternative collection procedures or a hearing before the jeopardy assessment was made, Egbuna refuted these claims by the affidavits and deposition testimony submitted, which showed that he had no personal authority over the issue, and that every step he took in preparing the audit for submission to others who had that power was taken in accordance with DRS guidelines, practices and procedures. The plaintiffs did not submit any countervailing evidence on this subject, failing to support any claim that Egbuna had the power to decide the issue or that, in exercising whatever authority he did have, that violated any DRS guidelines, practice or procedures. The plaintiffs thus did not raise any genuine issue of material fact as to Egbuna's claims that he had no control over either DRS billing or collection or its hearing process with respect to jeopardy assessments.
As for the jeopardy assessment itself, the trial court in Alexandre v. Law concluded that there was in fact no reasonable basis for the jeopardy assessment. Alexandre v. Law, supra, Superior Court, Docket No. CV 07 4015060. The Court, however, did not find that the defendants acted with malice, recklessness or wantonness in processing the assessment as they did. Instead, the evidence submitted by the defendants to this Court tends to show that both defendants consistently acted pursuant to the DRS guidelines, practices and procedures with regard to the jeopardy assessment. Defendant Egbuna's affidavit demonstrates that he played no role at all in the jeopardy assessment, and defendant Greenfield's affidavit demonstrates that he submitted the jeopardy assessment request in strict accordance with all applicable DRS guidelines and procedures then in place. Innes' affidavit also supports this fact. The plaintiffs thus adduced no evidence tending to refute defendant Egbuna's claim that he acted in good faith and pursuant to DRS guidelines, practices and procedures throughout the audit process.
Simply put, the plaintiffs have not submitted any evidence to refute the conclusion that defendant Egbuna acted in good faith and followed the DRS guidelines and procedures in conducting the audit, and the plaintiffs have thus failed to raise a genuine issue of material fact that he either acted in derogation of the DRS guidelines or acted with malice, recklessness or wantonness in conducting the audit. As such, defendant Egbuna is entitled to statutory qualified immunity, and the defendants are entitled to judgment as a matter of law. Accordingly, the defendants' motion for summary judgment must be granted with respect to count one.
2 Count Two: Claim of Intentional Infliction of Emotional Distress Against Defendant Greenfield
The plaintiffs' allegations in counts one and two of the amended complaint, which focus on the allegedly improper manner in which the tax audit was conducted and the way in which the tax assessment was enforced, fail to state sufficient facts to support of a claim for intentional infliction of emotional distress. While count two incorporates the conclusory allegations contained in count one of "wanton, reckless or malicious infliction of damage" by defendant Egbuna, the undisputed facts of the case demonstrate that neither of the defendants was responsible for the manner in which DRS billed or collected the tax assessment. Conclusory allegations relating to the manner in which the tax assessment was enforced, and any evidence submitted in support of those allegations, therefore fail to substantiate the plaintiffs' claims against the individual defendants.
With respect to the manner in which the tax audit was conducted, the plaintiffs claim that the defendants "intentionally ignored" certain items in their preparation of the audit. The defendants' affidavits refute these claims and specifically state that the items provided by plaintiff Alexandre, which he claims to have been ignored, were not sufficiently detailed to conduct an audit. There is no dispute that Alexandre was asked to provide more detailed documentation of the LLC's business profits, and that he refused to provide or could not provide such documentation during the initial audit period. As a result, the initial audit was calculated using what little information Alexandre had provided to DRS, plus projected calculations and figures based upon investigatory work by DRS and commonly accepted "markup methodology." As noted above, the alternative calculation methods used by defendant Egbuna for determining the plaintiffs' tax deficiency were recently upheld by our Supreme Court in Alexandre v. Commissioner of Revenue Services, supra, No. 18417, slip op. at 12.
Further detail on the materials and methodology used in calculating the audit is available in the trial court decision, Alexandre v. Law, supra, Superior Court, Docket No. CV 07 4015060, submitted by the defendants in support of their motion for summary judgment.
A review of the pleadings, affidavits and other proof submitted by the parties reveals that the plaintiffs' only remaining allegations in support of their claim of intentional infliction of emotional distress concern defendant Greenfield's July 2005 telephone conversation with plaintiff Alexandre. This conversation concerned Alexandre's refusal to sign another special consent to extend the statute of limitations for the audit. The plaintiffs allege that, during this conversation, defendant Greenfield questioned Alexandre's business ethics and threatened to process the tax assessment as a jeopardy assessment if Alexandre refused to consent to an extension of the audit period to facilitate the production of sufficient records to complete the audit. In his affidavit, defendant Greenfield stated that he initiated the telephone call to advise Alexandre of the likely outcome of the audit if DRS was forced to complete it using the insufficiently detailed materials Alexandre had previously provided. While a state employee who is "liable for intentional infliction of emotional distress may not avail [himself] of the sovereign immunity afforded by General Statutes § 4-165"; Henderson v. Hoban, Superior Court, judicial district of New Haven, Docket No. 391352 (July 7, 1998, Levin, J.); defendant Greenfield's alleged actions in this regard by no means constituted malicious, reckless or wanton conduct; see Martin v. Brady, supra, 261 Conn. 372, 379-80; or extreme or outrageous behavior; see Carnemolla v. Walsh, 75 Conn.App. 319, 331-32, 815 A.2d 1251, cert. denied, 263 Conn. 913, 821 A.2d 768 (2003). Even if the plaintiffs' allegations are true, as this Court must assume for purposes of this motion, our law is clear that conduct "that is merely insulting or displays bad manners or results in hurt feelings is insufficient to form the basis for an action based upon intentional infliction of emotional distress." Carnemolla v. Walsh, supra, 75 Conn.App. 332. The behavior here alleged is simply not of that rare sort to which our law narrowly limits claims of intentional infliction of emotional distress.
The plaintiffs maintain that the purpose of the call was to pressure or coerce Alexandre to extend the statute of limitations for the audit.
By the same token, the plaintiffs have failed to contradict the evidence presented by the defendants or to raise a genuine issue of material fact as to whether defendant Greenfield's behavior was malicious, reckless or wanton in connection with their deficient intentional infliction of emotional distress claim or that he acted in derogation of the DRS guidelines. The plaintiff's conclusory claims to the contrary are unavailing, as they are mere assertions of fact which cannot properly refute evidence before the court. See Byrne v. Burke, supra, 112 Conn.App. 267-68. Accordingly, defendant Greenfield is entitled to statutory qualified immunity and judgment on that claim as a matter of law. Accordingly, the motion for summary judgment must also be granted with respect to count two.
3 Count Five: Claimed Violation by Defendant Egbuna, as to Plaintiff J.P. Alexandre, LLC, of Article One, § 20 of the Constitution of Connecticut
The plaintiffs allege in count five of their operative complaint that the jeopardy assessment and the procedures used to collect it were utilized against them by defendant Egbuna because Alexandre is of West Indian descent and his nightclub was located in an economically distressed area. The plaintiffs further allege that the defendants did not take such action against other nightclubs and therefore the defendants violated the plaintiffs' equal protection rights. In order to overcome the statutory qualified immunity hurdle, the plaintiffs must show that the defendants' alleged misconduct was engaged in with malice, recklessness or wantonness.
As explained above, the defendants have presented evidence that at all times relevant to this case, they acted in good faith and pursuant to DRS guidelines, practices and procedures. The defendants refuted this constitutional claim by their uncontradicted deposition testimony and personal affidavits, wherein they stated that they simply followed DRS guidelines, practices and procedures in making the tax deficiency and jeopardy assessments. The plaintiffs' claims to the contrary are unavailing, as they are mere assertions of fact without any evidentiary support, and thus they cannot properly refute evidence before the court. The plaintiffs did not present evidence that raises a genuine issue of material fact as to whether the tax deficiency and jeopardy assessments were commenced with malice, recklessness or wantonness, and the plaintiffs did not present any evidence that the defendants treated the plaintiffs differently than other nightclubs in Connecticut. Because the plaintiffs have failed to submit evidence to raise a genuine issue of material fact as to whether the defendants acted according to DRS guidelines, practices and procedures or in a malicious, wanton or reckless manner against the LLC because of Alexandre's national origin and/or the location of his business, the defendants are entitled to statutory qualified immunity and judgment as a matter of law. Accordingly, the motion for summary judgment must also be granted with respect to count five.
4 Count Six: Claimed Violation by Defendant Egbuna, as to Plaintiff Alexandre Personally of Article One, § 20 of the Constitution of Connecticut
In count six of the operative complaint, the plaintiffs allege the same misconduct as that alleged in count five, but claim that such misconduct violated Alexandre's equal protection rights as an individual under the Constitution of Connecticut. For the reasons stated above, the plaintiffs have failed to raise any genuine issue of material fact that the defendants acted with malice, recklessness or wantonness or that they acted in derogation of DRS guidelines, policies or procedures, and thus the defendants are entitled to statutory qualified immunity and judgment as a matter of law. Accordingly, the motion for summary judgment must also be granted with respect to count six.
5 Count Nine: Claim of Common-Law Civil Conspiracy Against Both Defendants
In count nine of the amended complaint, the plaintiffs incorporate the allegations from counts one through eight and allege that the defendants' acts, as described in those counts, constituted a civil conspiracy. As explained above, such acts do not give rise to liability because of the doctrine of statutory qualified immunity, as the defendants submitted evidence that they acted in good faith and pursuant to the DRS guidelines, practices and procedures, and the plaintiffs have failed to refute this with any counteraffidavits or evidence to the contrary tending to raise a genuine issue of material fact as to whether the defendants acted with malice, recklessness or wantonness or in derogation of the DRS guidelines. Accordingly, the same acts do not become actionable merely because they are characterized as being part of a conspiracy. See Yankee Gas Co. v. Meriden, Superior Court, complex litigation docket at Tolland, Docket Nos. X07 CV 99 0072554, X07 CV 96 0072560, X07 CV 98 0072557, X07 CV 99 0072556, X07 CV 95 0072561, X07 CV 99 0072558, X07 CV 98 0072559, X07 CV 96 0072555 (June 30, 2000, Bishop, J.) [ 27 Conn. L. Rptr. 413]. For this reason as well, the defendants are entitled to judgment in their favor with respect to count nine.
B Federal Claims
Counts three, four, seven and eight of the plaintiffs' operative complaint allege violations of 42 U.S.C. § 1983. The defendants argue that the plaintiff's § 1983 claims are barred by the doctrine of qualified immunity because they cannot demonstrate a violation of their constitutional rights. In opposition, the plaintiffs argue that they have alleged and produced evidence of the defendants' violation of § 1983 and that the defendants are not entitled to qualified immunity.
Count three of the operative complaint alleges a violation of § 1983 "based on violations of the equal protection clause, premised on the national origin composition, size and location of said plaintiff, of the CT Page 10553 Fourteenth Amendment to the United States Constitution." Count four alleges a § 1983 violation "based on class-of-one violations of the equal protection clause of the Fourteenth Amendment to the United States Constitution." Count seven alleges a § 1983 violation "based on the denial of substantive due process guaranteed by the Fourteenth Amendment to the United States Constitution." Count eight alleges a § 1983 violation "based on violations of the Due Process Clauses of the Fifth and Fourteenth Amendments to the United States Constitution."
The defendants argue that qualified immunity bars the plaintiffs' claims because the defendants acted within the scope of their employment as state employees, in accordance with non-discriminatory agency procedures and in a manner that did not violate any of the plaintiffs' clearly established rights.
42 U.S.C. § 1983 provides, in relevant part as follows: "Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress." "The United States Supreme Court has repeatedly expressed that to state a claim under [42 U.S.C.] § 1983, a plaintiff must allege the violation of a right secured by the Constitution and laws of the United States, and must show that the alleged deprivation was committed by a person acting under color of state law." (Internal quotation marks omitted.) Tuchman v. State, 89 Conn.App. 745, 762, 878 A.2d 384, cert. denied, 275 Conn. 920, 883 A.2d 1252 (2005), quoting West v. Atkins, 487 U.S. 42, 48, 108 S.Ct. 2250, 101 L.Ed.2d 40 (1988).
"Qualified immunity shields government officials performing discretionary functions from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Morgan v. Bubar, 115 Conn.App. 603, 625, 975 A.2d 59 (2009). "Because the defense of qualified immunity is designed to relieve government officials of the burdens of litigation as well as of the threat of damages, summary judgment is encouraged as a device for disposing of claims barred by qualified immunity." Ying Jing Gan v. City of New York, 996 F.2d 522, 532 (2d Cir. 1993). "Qualified immunity is more than a simple defense — it is an entitlement not to stand trial or face the other burdens of litigation . . . an immunity from suit rather than a mere defense to liability; and like an absolute immunity, it is effectively lost if a case is erroneously permitted to go to trial." (Emphasis in original; internal quotation marks omitted.) Loria v. Gorman, 306 F.3d 1271, 1281 (2d Cir. 2002); see also Morgan v. Bubar, supra, 115 Conn.App. 609-10 ("[T]he United States Supreme Court directly addressed the question of whether a finding of qualified immunity in the context of a § 1983 action compels immunity from suit as well as from liability. . . . [T]he court stated that [t]he entitlement is an immunity from suit rather than a mere defense to liability; and like an absolute immunity, it is effectively lost if a case is erroneously permitted to go to trial." [Citation omitted; internal quotation marks omitted.]).
"[A] claim for qualified immunity from liability for damages under § 1983 raises a question of federal law . . . and not state law. Therefore, in reviewing these claims of qualified immunity we are bound by federal precedent, and may not expand or contract the contours of the immunity available to government officials . . . Furthermore, in applying federal law in those instances where the United States Supreme Court has not spoken, we generally give special consideration to decisions of the Second Circuit Court of Appeals." (Citation omitted; internal quotation marks omitted.) Morgan v. Bubar, supra, 115 Conn.App. 625.
To determine whether qualified immunity applies, the Court must perform a two-step inquiry: "One, the court must decide whether the facts that a plaintiff has alleged . . . make out a violation of a constitutional right.' . . . Two, the court must decide whether the right at issue was `clearly established' at the time of [the] defendant's alleged misconduct." (Citation omitted; internal quotation marks omitted.) Seri v. Bochicchio, 374 Fed.Appx. 114, 116 (2d Cir. 2010). Courts may "exercise [their] sound discretion in deciding which of the two prongs of the qualified immunity analysis should be addressed first in light of the circumstances in the particular case at hand." (Citation omitted; internal quotation marks omitted.) Id. A qualified immunity defense is established if (a) the defendant's action did not violate clearly established law, or (b) it was objectively reasonable for the defendant to believe that his action did not violate such law. Salim v. Proulx, 93 F.3d 86, 89 (2d Cir. 1996).
Until the Supreme Court's decision in Pearson v. Callahan, 555 U.S. 223, 129 S.Ct. 808, 172 L.Ed.2d 565 (2009), courts were required to perform the two-step qualified immunity analysis in order. "The relevant, dispositive inquiry in determining whether a right is clearly established is whether it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted." (Internal quotation marks omitted.) Loria v. Gorman, 306 F.3d 1271, 1281 (2d Cir. 2002); see also Hope v. Pelzer, 536 U.S. 730, 741, 153 L.Ed.2d 666, 122 S.Ct. 2508 (2002) ("[T]he salient question . . . is whether the state of the law [at the time of the challenged conduct] gave [the officers] fair warning that their alleged treatment of [the plaintiff] was unconstitutional"); Ham v. Green, 248 Conn. 508, 520, 729 A.2d 740, cert. denied, 528 U.S. 929, 79 S.Ct. 326, 145 L.Ed.2d 254 (1999) ("Whether an official protected by qualified immunity may be held personally liable for an allegedly unlawful official action generally turns on the objective legal reasonableness of the action . . . assessed in light of the legal rules that were clearly established at the time it was taken." [citations omitted; internal quotation marks omitted]).
Given the Supreme Court's instruction that "[t]he judges of the district courts and the courts of appeals should be permitted to exercise their sound discretion in deciding which of the two prongs of the qualified immunity analysis should be addressed first in light of the circumstances in the particular case at hand," Pearson v. Callahan, supra, 129 S.Ct. 818; and because the threshold issue of whether facts alleged show that the officers' conduct violated a constitutional right resolves the plaintiffs' § 1983 claims, it is submitted that this second inquiry need not be reached by the court in the present case.
1 Counts Three and Four: Claims of Equal Protection Violations by Defendant Egbuna under 42 U.S.C. § 1983
In the present case, the plaintiffs claim that they have alleged and produced evidence of the defendants' § 1983 violations; however, the pleadings, affidavits and other proof submitted by the parties establish that the defendants' conduct did not violate any of the plaintiffs' federal constitutional rights. The Equal Protection Clause of the fourteenth amendment requires government actors to treat all persons similarly situated alike. Cleburne v. Cleburne Living Ctr., Inc., 473 U.S. 432, 439, 105 S.Ct. 3249, 87 L.Ed.2d 313 (1985). To prevail on an equal protection claim, the plaintiff must prove that (1) the plaintiff, compared with others similarly situated, was selectively treated and (2) such selective treatment was based on impermissible considerations such as race, religion, intent to inhibit or punish the exercise of constitutional rights, or malicious or bad faith intent to injure the plaintiff. Diesel v. Lewisboro, 232 F.3d 92, 103 (2d Cir. 2000). Alternatively, absent proof of selective treatment based on impermissible considerations, a plaintiff may demonstrate an equal protection class of one violation by proving that the defendant intentionally treated him differently from others similarly situated and that there is no rational basis for the difference in treatment. Willowbrook v. Olech, 528 U.S. 562, 564, 120 S.Ct. 1073, 145 L.Ed.2d 1060 (2000); see also Thomas v. West Haven, 249 Conn. 385, 392-93, 734 A.2d 535 (1999), cert. denied, 528 U.S. 1187, 120 S.Ct. 1239, 146 L.Ed.2d 99 (2000).
The equal protection violations alleged in counts three and four fail as a matter of law because the plaintiffs have not alleged and cannot establish, by evidence submitted to this Court, that Alexandre was treated differently from any similarly situated comparator. See Patterson Collection v. Sullivan, supra, United States District Court, Docket No. 3:07 CV-0592 (D.Conn. May 7, 2010) (granting summary judgment in light of failure to produce evidence of comparators); Everitt v. DeMarco, United States District Court, Docket No. 3:08 CV-543 (D.Conn. March 30, 2010) ("The Court holds that the Plaintiffs' equal protection claim fails under either a selective enforcement or `class of one' theory because they have neither alleged nor produced any evidence that they were treated differently from similarly situated individuals"). Therefore, there exists no genuine issue of material fact as to whether the defendants violated the plaintiff's federal constitutional rights. Because the plaintiffs cannot establish that the defendants violated any of their constitutional rights, the doctrine of qualified immunity applies, the plaintiffs' § 1983 claims are barred, and the defendants are entitled to judgment as a matter of law. Accordingly, the motion for summary judgment must be granted with respect to counts three and four.
A comparator is a similarly situated person who may be used in comparison to demonstrate the different treatment that the plaintiff allegedly received. See, e.g., Grider v. Auburn, 618 F.3d 1240, 1264 (11th Cir. 2010) (`To be similarly situated, the comparators must be prima facie identical in all relevant respects . . ." [internal quotation marks omitted]).
2 Count Seven: Claim of Substantive Due Process Violations under 42 U.S.C. § 1983
In count seven of their operative complaint, the plaintiffs allege that the defendants violated their substantive due process rights by failing to comply with General Statutes § 12-417 in issuing the jeopardy tax assessment. They claim that the defendants' actions were an "arbitrary and egregious abuse of state governmental power . . . which shocks the conscience of the average reasonable taxpayer." The plaintiffs have not, however, identified any federal right that was violated by the defendants' alleged conduct.
In their opposition to the defendants' motion for summary judgment (No. 134), the plaintiffs state that they "premise their cause of action on the defendants' violation of [General Statutes] sections 12-39n and 12-417. Such violation was an infringement of the plaintiff's right to due process, the right to be free from the arbitrary excessive and abusive exercise of governmental power, redressable through 42 U.S.C. section 1983."
Substantive due process protects individuals from government action that is arbitrary, conscience-shocking, or oppressive in a constitutional sense. Sacramento v. Lewis, 523 U.S. 833, 846, 118 S.Ct. 1708, 140 L.Ed.2d 1043 (1998). Its protection does not extend to government action that is merely "incorrect or ill-advised." Lowrance v. Achtyl, 20 F.3d 529, 537 (2d Cir. 1994). To establish a violation of the right to substantive due process, a plaintiff must demonstrate government action that was "so egregious, so outrageous, that it may fairly be said to shock the contemporary conscience." Pena v. DePrisco, 432 F.3d 98, 112 (2d Cir. 2005). A plaintiff seeking relief for the violation of his substantive due process rights must therefore establish that the government's conduct was so arbitrary or egregious that it "shocks the conscience," and that the government infringed on fundamental rights "implicit in the concept of ordered liberty" not protected by other textual provisions of the Constitution. See United States v. Salerno, 481 U.S. 739, 746, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987).
As explained above, the undisputed facts of this case, as demonstrated by the evidence submitted by the defendants and uncontradicted by the plaintiffs, are that neither of the defendants was responsible for the manner in which DRS billed or collected the tax assessment. Allegations relating to the manner in which the tax assessment was enforced, and any evidence submitted in support of those allegations, therefore fail to substantiate the plaintiffs' claims against the individual defendants.
The defendants further maintain, without contradiction, that they played no role at all (defendant Egbuna) or only an indirect role (defendant Greenfield) in connection either with the decision to process the tax assessment as a jeopardy assessment.
With respect to the defendants' conduct in the investigation leading up to issuance of the jeopardy assessment, the defendants' affidavits support a finding that they acted pursuant to the DRS guidelines and policies in place at that time. Evidence submitted to the Court further supports the finding that the defendants were warranted in their belief that the plaintiffs had committed fraud or intended to evade the payment of sales and use taxes, based on the information that had been provided to them by the plaintiffs during the audit. The defendants' actions in this respect, regardless of whether they constituted a violation of General Statutes § 12-417, by no means "shock the conscience." See United States v. Salerno, supra, 481 U.S. 739, 746; Patterson Collection v. Sullivan, supra, United States District Court, Docket No. 3:07 CV-0592 ("Even conduct considered to be reprehensible may not fall within the narrow range of conscience-shocking conduct that violates substantive due process"). The plaintiffs' claims to the contrary are unavailing, as they are mere assertions of fact and cannot refute evidence properly before the court. See Byrne v. Burke, supra, 112 Conn.App. 267-68. Because the plaintiffs cannot establish that the defendants violated any of their constitutional rights or raise a genuine issue of material fact to that effect, the doctrine of qualified immunity applies, the plaintiffs' § 1983 claims are barred, and the defendants are entitled to judgment as a matter of law. Accordingly, the motion for summary judgment must also be granted with respect to count seven.
3 Count Eight: Claim of Procedural Due Process Violations Under 42 U.S.C. § 1983
Count eight of the operative complaint alleges that the defendants' conduct relative to DRS' issuance of the tax assessment deprived the plaintiffs of their property without due process, in that they "failed to permit the plaintiff . . . the opportunity to participate in a formal hearing before a hearing officer of the DRS." It is undisputed that issuance of the tax assessment and the subsequent placement of a lien on the plaintiffs' property by DRS resulted in a deprivation of the plaintiffs' property interest.
A plaintiff seeking relief for the violation of his procedural due process rights must first prove that he has a life, liberty, or property interest protected by the due process clause. Once he has made that initial showing, the plaintiff must then demonstrate that the state or its agents deprived him of that interest without affording him adequate process. Sealed v. Sealed, 332 F.3d 51, 55 (2d Cir. 2003). "When reviewing alleged procedural due process violations, the Supreme Court has distinguished between (a) claims based on established state procedures and (b) claims based on random, unauthorized acts by state employees. Hellenic Am. Neighborhood v. City of New York, 101 F.3d 877, 880 (2d Cir. 1996). When a claim is based on the random and unauthorized acts of a state employee, as opposed to a deprivation based on established state procedures, a plaintiff's due process rights are not violated so long as the state provides a meaningful post-deprivation remedy. Rivera-Powell v. Board of Elections, 470 F.3d 458, 465 (2d Cir. 2006). A post-deprivation remedy pursuant to state law may satisfy due process. See Hudson v. Palmer, 468 U.S. 517, 534, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984).
To satisfy the second showing requires a balancing of three factors: the interest of the individual, the risk of erroneous deprivation relative to the effectiveness of other additional safeguards and the interest of the government. See Rivera-Powell v. Board of Elections, 470 F.3d 458, 466 (2d Cir. 2006) (quoting Mathews v. Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893, 47 L.Ed. 20 18 (1976)).
The defendants submitted evidence to demonstrate that the plaintiffs have been afforded several opportunities, which the plaintiffs in fact have taken advantage of, to appeal the tax assessment and resulting property deprivation. As the burden then shifted to the plaintiffs to raise a genuine issue of material fact with regard to whether the deprivation was effected without due process, the plaintiffs' procedural due process claim fails as a matter of law because they have failed to raise a genuine issue of material fact, based upon the evidence submitted to the court, as to whether this deprivation was effected without due process. See Local 342 v. Huntington, 31 F.3d 1191, 1194 (2d Cir. 1994) ("In order to sustain an action for deprivation of property without due process of law, a plaintiff must first identify a property right, second show that the state has deprived him of that right, and third show that the deprivation was effected without due process." [Emphasis added; internal quotation marks omitted.]). The plaintiffs' complaints center on the methods employed by the defendants in computing and billing the amount of sales and use tax owed. This conduct cannot be construed as a state procedure or a decision by a high-ranking state official, in which case the existence of a post-deprivation remedy would be insufficient. See Velez v. Levy, 401 F.3d 75, 91 (2d Cir. 2005) (states act through high-level officials, and decisions of such officials resemble state procedures rather than haphazard acts of individual state actors). In the present case, the plaintiffs have been afforded multiple opportunities to appeal the tax assessment (in their tax appeal to DRS, their de novo appeal to the Superior Court and their subsequent appeal to the Appellate and Supreme Courts). These post-deprivation remedies therefore satisfy the requirements of due process. See Rivera-Powell v. Board of Elections, supra, 470 F.3d 465.
In considering a motion for summary judgment, "the mere possibility that a factual dispute may exist, without more, is not sufficient to overcome a convincing presentation by the moving party." Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir. 1980). "To defeat summary judgment . . . non-moving parties must do more than simply show that there is some metaphysical doubt as to the material facts . . . and they may not rely on conclusory allegations or unsubstantiated speculation." (Internal quotation marks omitted.) Jeffreys v. City of New York, 426 F.3d 549, 554 (2d Cir. 2005).
For the foregoing reasons, the plaintiffs have failed to raise a genuine issue of material fact as to whether the defendants violated the plaintiff's federal constitutional rights. Because the plaintiffs cannot establish that the defendants violated any of their constitutional rights, the doctrine of qualified immunity applies, the plaintiffs' § 1983 claims are barred, and the defendants are entitled to judgment as matter of law. Accordingly, the motion for summary judgment must also be granted with respect to count eight.
4
CT Page 10548
Count Ten: Claim of Civil Conspiracy under 42 U.S.C. § 1985(3)
In count ten of their amended and revised complaint, the plaintiffs incorporated their first nine counts and allege that the defendants acted with an "invidiously discriminatory animus toward plaintiffs in order to deny the plaintiffs equal protection under the laws of the state of Connecticut" by the enforcement of the tax deficiency and jeopardy assessment, which had no foundation in state law and violates 42 U.S.C. § 1985(3). The defendants argue that the plaintiffs' claim fails because, as with the § 1983 claims, when there is an adequate state remedy available for challenging the sales and use tax, such as General Statutes § 12-422, the court is required to dismiss the federal claims, and cites Ziska v. Water Pollution Control Authority, supra, 195 Conn. 690 and Jade Aircraft Sales, Inc. v. Crystal, supra, 236 Conn. 709, along with federal cases, to support this contention. The plaintiffs do not address this argument in their opposition memorandum.42 U.S.C. § 1985(3) provides that: "If two or more persons in any State or Territory conspire or go in disguise on the highway or on the premises of another, for the purpose of depriving, either directly or indirectly, any person or class of persons of the equal protection of the laws, or of equal privileges and immunities under the laws; or for the purpose of preventing or hindering the constituted authorities of any State or Territory from giving or securing to all persons within such State or Territory the equal protection of the laws; or if two or more persons conspire to prevent by force, intimidation, or threat, any citizen who is lawfully entitled to vote, from giving his support or advocacy in a legal manner, toward or in favor of the election of any lawfully qualified person as an elector for President or Vice President, or as a Member of Congress of the United States; or to injure any citizen in person or property on account of such support or advocacy; in any case of conspiracy set forth in this section, if one or more persons engaged therein do, or cause to be done, any act in furtherance of the object of such conspiracy, whereby another is injured in his person or property, or deprived of having and exercising any right or privilege of a citizen of the United States, the party so injured or deprived may have an action for the recovery of damages occasioned by such injury or deprivation, against any one or more of the conspirators."
In a civil conspiracy claim under 42 U.S.C. § 1985, the allegations must state that "the conspiracy . . . [aims] at a deprivation of the equal enjoyment of rights secured by the law to all. Griffin v. Breckenridge, 403 U.S. 88, 102, 91 S.Ct. 1790, 89 L.Ed.2d 338 (1971)." Miller v. O'Meara, Superior Court, judicial district of Hartford, Docket No. CV 02 0817587 (November 23, 2004, Booth, J.). "[I]t is well settled that in order to make a viable claim under § 1985, the complaint must allege invidiously discriminatory, class-based animus and must allege facts showing this invidiousness. In the absence of any evidence of class-based animus, the action must fail." Fetterman v. University of Connecticut, 192 Conn. 539, 555, 473 A.2d 1176 (1984).
In the present case, as discussed above, there is no genuine issue of material fact that the plaintiffs' substantive and procedural due process rights have not been violated, based upon the uncontested evidence presented by the defendants. There is also no genuine issue of material fact that the plaintiffs' equal protection rights have not been violated. This claim thus fails because the plaintiffs have failed to present evidence to refute the defendants' affidavits and deposition testimony that the defendants followed DRS practices, procedures and policies, and that Alexandre was not treated differently from any other taxpayer based upon his race, ethnicity or national origin. The plaintiffs' conclusory allegations that they were treated differently by the defendants do not raise a genuine issue of material fact, as there is an absence of any evidence of a class-based animus. See Fetterman v. University of Connecticut, supra, 192 Conn. 555. Thus, the defendants are entitled to judgment as a matter of law on this claim. Accordingly, the motion for summary judgment must be granted with respect to count ten.
III CONCLUSION
For the foregoing reasons, each of the plaintiffs' claims fails because this Court lacks subject-matter jurisdiction to entertain it and, to the extent it survives the defendants' threshold jurisdictional challenge, the defendants are entitled to qualified immunity with respect to each such claim. Accordingly, the defendants' motion for summary judgment is hereby granted in its entirety.
IT IS SO ORDERED this 2nd day of May 2011.