Buczek v. O'Carroll et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM , MOTION to Dismiss for Lack of Jurisdiction

W.D.N.Y.May 12, 2017

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NEW YORK x : DEBORAH ANN BUCZEK, : : Plaintiff, : : v. : : UNITED STATES OF AMERICA, : : Defendant. : x No 1:15-cv-00273S NOTICE OF DEFENDANT UNITED STATES OF AMERICA’S MOTION TO DISMISS To: Deborah-Ann Buczek Postal Office 43 Lakeview, NY 14085 PLEASE TAKE NOTICE that upon all papers filed and proceedings had herein, the United States will move this Court before the Honorable William M. Skretny, Judge of the United States District Court for the Western District of New York, in the courtroom usually occupied by him at the United States Courthouse, 2 Niagara Square, Buffalo, New York, at a date and time to be determined by the Court, for an order to dismiss Plaintiff Deborah Ann Buczek’s Amended Complaint and Supplement to the Amended Complaint. For the reasons stated in the accompanying memorandum of law in support of this motion, the Court should (1) dismiss, pursuant to Fed. R. Civ. P. Rule 12(b)(6), the plaintiff’s 26 U.S.C. § 7433 claims for failure to state a claim upon which relief can be granted and (2) dismiss all the plaintiff’s other claims for lack of jurisdiction based on sovereign immunity; pursuant to 12(b)(1) for lack of subject-matter jurisdiction; or, alternatively, pursuant to 12(b)(6) for failure to state a claim upon which relief can be granted. Case 1:15-cv-00273-WMS Document 8 Filed 05/12/17 Page 1 of 3 2 In accordance with L.R. Civ. P. 7(a)(1), the government intends to file and serve reply papers in this matter. DAVID A. HUBBERT Acting Assistant Attorney General U.S. Department of Justice, Tax Division /s/ James Yu JAMES YU Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 55 Washington, D.C. 20044 202-307-6460 (v) 202-514-5238 (f) James.Yu@usdoj.gov Case 1:15-cv-00273-WMS Document 8 Filed 05/12/17 Page 2 of 3 3 CERTIFICATE OF SERVICE I hereby certify that on May 12, 2017, a copy of the foregoing Notice of Defendant United States of America’s Motion to Dismiss, and accompanying memorandum of law, was filed electronically on May 12, 2017. A copy of the foregoing document and accompanying papers (including printed copies of decisions cited therein that are reported exclusively on computerized databases pursuant to Local Rule 7(a)(8)) was also sent, via U.S. mail, to the following party at the address listed below: Deborah-Ann Buczek Postal Office 43 Lakeview, NY 14085 /s/ James Yu JAMES YU Trial Attorney, Tax Division U.S. Department of Justice Case 1:15-cv-00273-WMS Document 8 Filed 05/12/17 Page 3 of 3 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NEW YORK x : DEBORAH ANN BUCZEK, : : Plaintiff, : : v. : : UNITED STATES OF AMERICA, : : Defendant. : x No 1:15-cv-00273S MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT UNITED STATES OF AMERICA’S MOTION TO DISMISS The defendant United States of America, through undersigned counsel, submits this memorandum of law in support of its motion to dismiss the plaintiff’s amended complaint (“Amended Complaint”) (dkt. no. 5) and supplement to the Amended Complaint (“Supplement”) (dkt. no. 6). For the reasons stated below, the Court should (1) dismiss, pursuant to Fed. R. Civ. P. Rule 12(b)(6), the plaintiff’s 26 U.S.C. § 7433 claims for failure to state a claim upon which relief can be granted and (2) dismiss all the plaintiff’s other claims for lack of jurisdiction based on sovereign immunity; pursuant to 12(b)(1) for lack of subject-matter jurisdiction; or, alternatively, pursuant to 12(b)(6) for failure to state a claim upon which relief can be granted. I. Procedural Background On March 30, 2015, the plaintiff, Deborah Ann Buczek, initiated this action by filing a complaint against various individuals, including “an IRS Agent, a local Congressman, a Certified Public Accountant, a bank, and a law firm” who she alleges “have in some way participated in the unlawful levying of Plaintiff’s assets and collection of her taxes.” (Dkt. no. 4 at 1). In an order dated August 25, 2015, the Court interpreted the plaintiff’s complaint as seeking relief under 26 U.S.C. § 7433 and ordered that she file an amended complaint conforming to the Case 1:15-cv-00273-WMS Document 8-1 Filed 05/12/17 Page 1 of 8 2 requirements of § 7433. (Dkt. no. 4). Specifically, the Court ordered that the amended complaint name only the United States as a defendant and that the plaintiff set forth facts regarding whether she met the requirements under § 7433(d) regarding exhaustion of administrative remedies and timeliness. (Dkt. no. 4 at 7-8). On September 25, 2015, the plaintiff filed her Amended Complaint; she followed up with the Supplement on October 13, 2015. On February 27, 2017, the Court issued an order construing the two pleadings as together forming the plaintiff’s amended complaint and finding that she had sufficiently complied with its prior order. (Dkt. no 7). A. Factual Allegations in the Plaintiff’s Pleadings Given the length of the plaintiff’s Amended Complaint and Supplement, which (including exhibits) exceed 500 pages total, and the hodgepodge of legal and factual assertions contained therein, it is difficult to comprehensively catalog the alleged factual bases for the plaintiff’s claims. Nevertheless, the following is undersigned counsel’s best understanding of the alleged facts relevant to the plaintiff’s claims against the United States.1 In March and April of 2014, a revenue officer for the Internal Revenue Service (“IRS”), levied the plaintiff’s bank account. Amd. Compl. ¶ 2. In addition, beginning in April 2014 and continuing through September 2015, the IRS also levied the plaintiff’s Social Security benefits in an amount in excess of 15% of her monthly benefits. Amd. Compl. ¶¶ 2, 6. At some unspecified time, the plaintiff filed requests for collection due process hearings, presumably under 26 U.S.C. § 6320 or § 6330, as to her 2003, 2005, 2006, and 2007 tax years. Amd. Compl. ¶ 7. As a result 1 Solely for purposes of this motion, the United States assumes the facts as alleged in the Amended Complaint and Supplement. Case 1:15-cv-00273-WMS Document 8-1 Filed 05/12/17 Page 2 of 8 3 of the IRS’s collection activities, the plaintiff has suffered unspecified economic and emotional injuries. Amd. Compl. ¶¶ 38-39. II. Argument A. Summary of the Plaintiff’s Claims Construing the plaintiff’s pleadings liberally, she has set forth claims against the United States that fall into three categories: 26 U.S.C. § 7433; the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p; and 18 U.S.C. §§ 1341, 1961, 1962, and 1964. Amd. Compl. ¶ 1; Suppl. at 93. The plaintiff’s claims under § 7433 should be dismissed because she has failed to state a claim upon which relief can be granted. The remaining claims should be dismissed because the Court lacks jurisdiction to hear them. Moreover, to the extent Court does have jurisdiction over any of those remaining claims, such claims should also be dismissed because the plaintiff has failed to state a claim upon which relief can be granted. B. Legal Standard The United States, as sovereign, may not be sued without its consent, and the terms of its consent define the Court’s jurisdiction over the United States. U.S. Dep’t of Energy v. Ohio, 503 U.S. 607, 615 (1992); United States v. Testan, 424 U.S. 392, 399 (1976); Murphy v. United States, 45 F.3d 520, 522 (1st Cir. 1995). Where, by statute, the sovereign consents to be sued, the suit may be maintained if brought in compliance with the exact terms of the statute. United States v. Sherwood, 312 U.S. 584, 590 (1941). Any consent must be unequivocally expressed by Congress, however, and is to be strictly and narrowly construed in favor of the United States. United States v. Idaho, 508 U.S. 1, 7 (1993); United States v. Nordic Village, Inc., 503 U.S. 30, 34 (1992). If a court lacks jurisdiction due to sovereign immunity, the court also lacks subject- matter jurisdiction. See Aguilar v. United States, 268 Fed. App’x 88, 90 (2d Cir. 2008) (“Sovereign immunity deprives the district court of subject matter jurisdiction over this claim.”) Case 1:15-cv-00273-WMS Document 8-1 Filed 05/12/17 Page 3 of 8 4 The plaintiff bears the burden of proving that subject matter jurisdiction exists, and “must allege facts that affirmatively and plausibly suggest that it has standing to sue.” Amidax Trading Group v. S.W.I.F.T. SCRL, 671 F.3d 140, 145 (2d Cir. 2011); Fountain v. Karim, 838 F.3d 129, 134 (2d Cir. 2016); Aurecchione v. Schoolman Transp. System, Inc., 426 F.3d 635, 638 (2d Cir. 2005). In reviewing a motion to dismiss for lack of subject-matter jurisdiction, the court “must take all uncontroverted facts in the complaint (or petition) as true, and draw all reasonable inferences in favor of the party asserting jurisdiction.” Tandon v. Captain’s Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014). If a defendant proffers evidence beyond the complaint, a “plaintiff[] will need to come forward with evidence of [her] own to controvert hat presented by the defendant.” Carter v. HealthPort Techs., LLC, 822 F.3d 47, 57 (2d Cir. 2016). A different standard governs review of motions to dismiss for failure to state a claim upon which relief may be granted. Such a motion may be granted only if it appears beyond doubt that the non-moving party could prove no set of facts that would entitle her to relief and the court must accept as true all well-pleaded factual allegations and draw reasonable inferences in the non-movant’s favor. Hishon v. King & Spaulding, 467 U.S. 69, 73 (1984); Goldstein v. Pataki, 516 F.3d 50, 56 (2d Cir. 2008). However, “[t]hreadbare recitals of the elements of a cause of action, supported by merely conclusory statements, do not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Finally, before examining the allegations contained in the complaint, we note that pro se pleadings are held to “less stringent standards than formal pleadings drafted by lawyers,” Haines v. Kerner, 404 U.S. 519, 520 (1971), but “pro se status ‘does not exempt a party from compliance with relevant rules of procedural and substantive law.’” Erdheim v. C.I.R., 661 F.Supp.2d 405, 410 2009, quoting Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 477 (2d Case 1:15-cv-00273-WMS Document 8-1 Filed 05/12/17 Page 4 of 8 5 Cir. 2006); see also Dourlain v. United States, No. 5:16-cv-0245(GTS/DEP), 2016 WL 6833996, at *5 (N.D.N.Y. Nov. 18, 2016) (“[T]he requirements set forth in Fed. R. Civ. P. 8, 10 and 12 are procedural rules that even pro se civil rights plaintiffs must follow.”). C. The Plaintiff Has Failed to State a Claim Under 26 U.S.C. § 7433 1. The Plaintiff Has Not Exhausted Administrative Remedies With the exception of § 7432 (relating to damages for failure to release a lien), § 7433 is the “exclusive remedy for recovering damages” resulting from the “wrongful” collection of taxes. 26 U.S.C. § 7433(a). Any action brought under § 7433, however, must meet the requirements set forth in § 7433(d) including that a plaintiff “exhaust[] the administrative remedies available to such plaintiff within the Internal Revenue Service” prior to bringing suit. 26 U.S.C. § 7433(d). The Department of the Treasury has promulgated regulations establishing the steps required to pursue an administrative claim. 26 C.F.R. § 301.7433-1. Specifically, before any unauthorized collection suit may be brought, the taxpayer must file a written claim with the Area Director of the area in which the taxpayer resides. 26 C.F.R. § 301.7433-1(d), - 1(e); see also Hoogerheide v. I.R.S., 637 F.3d 634, 639 (6th Cir. 2011) (affirming dismissal of taxpayer’s complaint where taxpayer did not exhaust his administrative remedies because letters failed to comply with the requirements under 26 C.F.R. § 301.7433-1(e)). The plaintiff’s pleadings do not contain any allegation that she filed an administrative claim meeting the requirements under the relevant regulation. Instead, the only statements on the subject are irrelevant or conclusory. See, e.g., Amd. Compl. ¶ 7 (“[W]e checked with the IRS and there were no debts outstanding at that time. Therefore I have satisfied the requirement of exhaustion of administrative remedy for these.”). The plaintiff has not met the mandatory requirements of § 7433(d) and has consequently failed to state a claim under § 7433 upon which relief can be granted. Gray v. United States, 723 F.3d 795, 802 (7th Cir. 2013), Hoogerheide, Case 1:15-cv-00273-WMS Document 8-1 Filed 05/12/17 Page 5 of 8 6 637 F.3d at 639 (“Section 7433(d) is mandatory. It is a congressionally established exhaustion imperative, not a judicially created one, and accordingly the courts lack discretion to waive it.”); see also Kuhl v. United States, 467 F.3d 145, 147-49 (2d Cir. 2006). 2. Alternatively, the Plaintiff’s § 7433 Claims Lack Merit As to the substance of the plaintiff’s claims under § 7433, her arguments appear to be premised on three grounds: (1) she has an ongoing collection due process hearing and so collection efforts should have been stayed, (2) the levy of her Social Security payments in excess of 15% violated 26 U.S.C. § 6331(h), and (3) Social Security benefits are exempt from levy under 42 U.S.C. § 407(b). Amd. Compl. ¶¶ 30-37; Suppl. at 72. The plaintiff’s claims are legally insufficient on any of these grounds, and she has failed to state a valid claim under § 7433. First, the plaintiff’s pleadings fail to specify when her alleged requests for collection due process hearings were filed or what actions were taken as a result. Amd. Compl. ¶ 7. Conclusory statements that these requests were timely or remain open are insufficient to withstand a motion to dismiss. See Iqbal, 556 U.S. at 678. Second, contrary to the plaintiff’s assertion on the matter (see, e.g., Amd. Compl. ¶ 32), the IRS is authorized to levy 100% of Social Security benefits under 26 U.S.C. § 6331(a). Bowers v. United States, 861 F. Supp. 2d 921, 923 (C.D. Ill. 2012), aff’d 498 Fed. App’x 623 (7th Cir. 2012); Hines v. United States, 658 F. Supp. 2d 139, 145-47 (D.D.C. 2009). Finally, Social Security benefits are not exempt from IRS levy. 26 U.S.C. § 6334(c). Case 1:15-cv-00273-WMS Document 8-1 Filed 05/12/17 Page 6 of 8 7 D. The Plaintiff’s Claims Under the FDCPA and Title 18 Are Barred by Sovereign Immunity 1. The United States Cannot Be Sued Under the FDCPA The plaintiff alleges numerous violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p. The FDCPA does not contain any waiver of sovereign immunity, and therefore the Court lacks jurisdiction as to this claim. See Wagstaff v. Dep’t of Educ., 509 F.3d 661, 664 (5th Cir. 2007); Ha v. U.S. Dep’t of Educ., 680 F. Supp. 2d 45, 47 (D.D.C. 2010); Perry v. Wright, No. 12-cv-0721(CM), 2013 WL 950921, at * 5 (S.D.N.Y. Mar. 8, 2013). Moreover, “the FDCPA’s definition of ‘debt collector’ expressly excludes ‘any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties.’” Perry v. Wright, No. 12-cv-0721(CM), 2013 WL 950921, at * 5 (S.D.N.Y. Mar. 8, 2013) (citing 15 U.S.C. § 1692(a)(6)(C)). Consequently, even if the Court did have jurisdiction over this claim, the claim would need to be dismissed under Rule 12(b)(6). 2. The Plaintiff Cannot Bring Criminal Charges Against the United States The plaintiff also seeks judgment against the United States pursuant to 18 U.S.C. §§ 1341, 1961, 1962, and 1964. Suppl. at 93. “These provisions provide absolutely no jurisdictional basis for the plaintiff’s claim[s] because the prosecution of these criminal offenses has been entrusted solely to the federal government.” Milburn v. Blackfrica Promotions, Inc., 392 F. Supp. 434, 435 (S.D.N.Y. 1974). Moreover, even if a private litigant could sue under these criminal statutes, these provisions contain no waiver of sovereign immunity and so the Court would lack jurisdiction. Case 1:15-cv-00273-WMS Document 8-1 Filed 05/12/17 Page 7 of 8 8 III. Conclusion For the foregoing reasons, the plaintiff’s Amended Complaint and Supplement should be dismissed. Respectfully submitted, DAVID A. HUBBERT Acting Assistant Attorney General U.S. Department of Justice, Tax Division /s/ James Yu JAMES YU Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 55 Washington, D.C. 20044 202-307-6460 (v) 202-514-5238 (f) James.Yu@usdoj.gov Case 1:15-cv-00273-WMS Document 8-1 Filed 05/12/17 Page 8 of 8