1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 CAROLINE D. CIRAOLO Principal Deputy Assistant Attorney General NITHYA SENRA, SBN 291803 MAHANA K. WEIDLER Trial Attorneys, Tax Division U.S. Department of Justice P.O. Box 683, Ben Franklin Station Washington, D.C. 20044 Telephone: (202) 307-6570 Facsimile: (202) 307-0054 E-mail: Nithya.Senra@usdoj.gov Mahana.K.Weidler@usdoj.gov LAURA E. DUFFY United States Attorney Of Counsel Attorneys for the United States of America IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA KENDRICK BANGS KELLOGG, Plaintiff, v. CHRISTINE V. OLSEN; GUEN KISSEL; PATRICIA CRAWFORD; JOHN KOSKINEN, COMMISSIONER, INTERNAL REVENUE SERVICE; TAX DIVISION U.S. DEPARTMENT OF JUSTICE; Defendants. Case No. 3:16-cv-640-BAS-JLB NOTICE OF MOTION AND MOTION TO DISMISS Date: Mon., Sept. 26, 2016 Judge: Hon. Cynthia Bashant NO ORAL ARGUMENT UNLESS REQUESTED BY THE COURT Case 3:16-cv-00640-BAS-JLB Document 39 Filed 08/22/16 Page 1 of 4 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 PLEASE TAKE NOTICE that defendant, United States of America, by and through its undersigned counsel, will bring its MOTION TO DISMISS this action on behalf of nominal defendants Guen Kissel (sic), John Koskinen, Commissioner, Internal Revenue Service, Patricia Crawford, and Tax Division, U.S. Department of Justice, before the Honorable Cynthia Bashant on Monday, September 26, 2016. PLEASE TAKE NOTICE that there will be no oral argument on this motion unless requested by the Court. Per the Court’s Standing Order for Civil Cases, “The Court may resolve motions on the papers submitted and without oral argument in accordance with Civil Local Rule 7.1(d)(1). Consequently, the hearing date does not indicate a date when appearances are necessary; rather, it sets the briefing schedule for the motion.” PLEASE TAKE NOTICE that you must file your opposition or statement of non-opposition with the Clerk’s office and deliver copies to the undersigned NOT LATER THAN THE RESPONSE DATE which is September 12, 2016. // The United States hereby submits this motion to dismiss this action with prejudice, (1) pursuant to Fed. R. Civ. P. 12(b)(5) for insufficient service of process; (2) pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction; and (3) pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim Case 3:16-cv-00640-BAS-JLB Document 39 Filed 08/22/16 Page 2 of 4 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 upon which relief can be granted; and (4) pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction over any of the individually named defendants. DATED this 22nd day of August, 2016. Respectfully submitted, CAROLINE D. CIRAOLO Principal Deputy Assistant Attorney General /s/ Nithya Senra NITHYA SENRA, SBN 291803 MAHANA K. WEIDLER Trial Attorneys, Tax Division U.S. Department of Justice LAUREN E. DUFFY United States Attorney Of Counsel Case 3:16-cv-00640-BAS-JLB Document 39 Filed 08/22/16 Page 3 of 4 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 CERTIFICATE OF SERVICE I hereby certify that on this 22nd day of August, 2016, I have caused to be mailed the foregoing NOTICE OF MOTION AND MOTION TO DISMISS, and supporting MEMORANDUM OF POINTS AND AUTHORITIES, by United States Postal Service to: Kendrick Bangs Kellogg 29115 Valley Center Road K-109 Valley Center, CA 92082 /s/ Nithya Senra NITHYA SENRA Trial Attorney, Tax Division United States Department of Justice Case 3:16-cv-00640-BAS-JLB Document 39 Filed 08/22/16 Page 4 of 4 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 CAROLINE D. CIRAOLO Principal Deputy Assistant Attorney General NITHYA SENRA, SBN 291803 MAHANA K. WEIDLER Trial Attorneys, Tax Division U.S. Department of Justice P.O. Box 683, Ben Franklin Station Washington, D.C. 20044 Telephone: (202) 307-6570 Facsimile: (202) 307-0054 E-mail: Nithya.Senra@usdoj.gov Mahana.K.Weidler@usdoj.gov LAURA E. DUFFY United States Attorney Of Counsel Attorneys for the United States of America IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA KENDRICK BANGS KELLOGG, Plaintiff, v. CHRISTINE V. OLSEN; GUEN KISSEL; PATRICIA CRAWFORD; JOHN KOSKINEN, COMMISSIONER, INTERNAL REVENUE SERVICE; TAX DIVISION U.S. DEPARTMENT OF JUSTICE; Defendants. Case No. 3:16-cv-640-BAS-JLB MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF UNITED STATES’ MOTION TO DISMISS Date: Mon., Sept. 26, 2016 Judge: Hon. Cynthia Bashant NO ORAL ARGUMENT UNLESS REQUESTED BY THE COURT Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 1 of 13 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 The United States of America, the real party in interest, on its own behalf, and on behalf of the individually named defendants Guen (sic) Kissel; Patricia Crawford; John Koskinen, Commissioner of the Internal Revenue Service; and the Tax Division U.S. Department of Justice, (collectively “the federal defendants”), submits this brief in support of its motion to dismiss this action pursuant to Fed. R. Civ. P. 12(b)(1), 12(b)(6), 12(b)(5) and 12(b)(2). INTRODUCTION The Court should dismiss this frivolous action with prejudice, as plaintiff has failed to properly serve any of the named defendants, has failed to allege any plausible claim for relief, has failed to name the proper party defendants, and the statute of limitations to contest any of the alleged collection actions has clearly run. Plaintiff, Kendrick Bangs Kellogg, commenced this action on March 15, 2016, by filing a complaint titled “Motion for Order to Return Property ‘Social Security Benefits’ Plus Interest, Summary Judgment.” Kellogg filed an amended complaint on March 21, 2016, which he amended a second time on April 26, 2016 (“Second Amended Complaint” or “SAC”). In his Second Amended Complaint (“SAC”), Kellogg names Guen (sic) Kissel (IRS Tax Examiner), Patricia Crawford (IRS Appeals Officer), John Koskinen (IRS Commissioner), the Tax Division U.S. Department of Justice, and “Does 1 through 1-100 Inclusive” as defendants, and alleges “illegal taking of [his] ‘Social Security property.’” ECF No. 13, SAC at ¶ Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 2 of 13 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 22. Plaintiff suggests that defendant Christine V. Olsen has passed away (ECF No. 13, p. 1, ln. 18), and it is unclear if he intended to dismiss this nominal defendant (her name was removed from Plaintiff’s subsequent pleading captions, but Ms. Olsen’s name remains on the Court’s docket). The SAC is unintelligible and inscrutable, and cites to nonsensical tax-defier arguments.1 Neverthless, it appears Plaintiff is seeking a refund of social-security benefits that the IRS allegedly levied upon between March 2002 and November 2008. Plaintiff contends that the IRS levied these funds to collect Plaintiff’s 1993 and 1994 outstanding tax liabilities. Plaintiff’s Second Amended Complaint seems primarily concerned with undoing years of levies used to collect those outstanding tax assessments. Now, nearly 8 years since the alleged collection actions, Plaintiff has brought a suit against various federal entities and employees, apparently seeking a refund of money collected to satisfy Plaintiff’s outstanding tax liabilities as determined by the United States Tax Court. 1 SAC at ¶ 6, for example, states: “Because Teddy Roosevelt’s oath of office included ‘protesting’ against those against the Constitution as Kellogg did, by Olsen adding $5000 on top for Kellogg ‘ sounding like a ‘protestor’ makes Olsen’s RTM for NOL ‘void ab initio’.” See also SAC at ¶ 21: “Because Kellogg’s name is Kendrick Bangs Kellogg, Kellogg’s name is not Kendrick B Kellogg, and as a result IRS is responsible for law of “influence not knowing circumstances.” Makes IRS false examinations for 1993, 1994, 1995, “void ab initio.” Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 3 of 13 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 The United States hereby submits this motion to dismiss this action with prejudice, (1) pursuant to Fed. R. Civ. P. 12(b)(5) for insufficient service of process; (2) pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction; (3) pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted; and (4) pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction over the individually named defendants. ARGUMENT I. The Court Should Substitute the United States for all Named Defendants as the Only Proper Defendant in this Action The sole and proper defendant in this case is the United States of America. The Tax Division, U.S. Department of Justice is not a proper party in this suit because a federal agency may not be sued in its own name without express congressional authority. See Blackmar v. Guerre, 342 U.S. 512, 514 (1952). There is no Congressional authority to sue the Department of Justice or the Tax Division, and therefore, the U.S. Department of Justice Tax Division is not a suable entity, cannot be a defendant in this case, and should be dismissed with prejudice. Additionally, the individually named defendants Commissioner Koskinen, and defendants Kissel, Olsen and Crawford are also improper parties to this action. A civil action filed against an officer of the United States is in fact “against the sovereign if the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration, or if the effect of the judgment Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 4 of 13 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 would be to restrain the Government from acting, or to compel it to act.” Dugan v. Rank, 372 U.S. 609 (1963) (internal citations omitted). Because adjudication of this case would expend itself on the public fisc, this suit constitutes an action against the United States of America. See, e.g., Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985). All of the relief that plaintiff seeks (i.e. refund of federal taxes) can only be obtained from the United States, and thus the United States of America is the only proper federal defendant. II. Dismissal under Fed. R. Civ. P. 12(b)(5) for Insufficient Service of Process Plaintiff has failed to properly serve the United States of America in this action. Furthermore, while the United States asserts that it is the only proper defendant, to the extent the Court denies the request to substitute the United States of America for all named defendants, Plaintiff has failed to properly serve the individually named defendants in this action. Accordingly, the United States hereby moves to dismiss the individually named defendants for insufficient service of process pursuant to Fed. R. Civ. P. 12(b)(5). Absent proper service, this Court lacks personal jurisdiction over the United States or any of the named defendants. In order to serve the nominal defendants, he “must serve the United States and also serve the officers or employees under Fed. R. Civ. P. 4(e), (f) or (g).” Fed. R. Civ. P. 4(i)(3). In order to serve the United States, Plaintiff must either deliver a copy of the summons and of the complaint to the United States Attorney Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 5 of 13 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 for the Southern District of California in person to her designee or “send a copy of each by registered or certified mail to the civil-process clerk at the United States attorney’s office.” Fed. R. Civ. P. 4(i)(1)(A)(i), & (ii). Further, in order to effect service on the United States, Plaintiff must “send a copy of each by registered or certified mail to the Attorney General of the United States at Washington, D.C.” Fed. R. Civ. P. 4(i)(1)(B). There is no record here that Plaintiff has properly served the United States of America or any of the named defendants. Plaintiff has not filed any proof of service indicating that either the Attorney General or the United States Attorney for the Southern District of California has been served in this action. Plaintiff was required to do so in order to properly serve any of the named defendants prior to the July 18, 2016 deadline for service set by the Court (ECF No. 17) Plaintiff has not sought any further extension of time to effect proper service, and has not demonstrated any good cause for his failure to effect proper service. As a result, the Court should dismiss this action for Plaintiff’s failure to effect proper service against either the United States or any of the named defendants. III. No Bivens-type Constitutional Tort is available here, and Qualified Immunity Bars Any Action Against the Individually Named Defendants In certain circumstances, a suit for damages based on constitutional violations may be maintained against a government official in his or her individual capacity. See Bivens v. Six Unknown Fed. Narcotics Agents, 403 U.S. 388 (1971). Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 6 of 13 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Plaintiff has not stated that he is bringing a cause of action under any specific constitutional violation, but refers to his “Constitutional Rights” throughout the SAC. Thus, it is unclear if Plaintiff seeks to file a Bivens action. Nevertheless, there is no Bivens remedy available for alleged constitutional violations in the assessment and collection of taxes. See Adams v. Johnson, 355 F. 3d 1179, 1183-84 (9th Cir. 2004). The availability of remedies under the Internal Revenue Code preclude plaintiff from bringing a Bivens action against any of the individually named defendants. Id. at 1184-85; Krieg v. Mills, 117 F. Supp. 2d 964, 967 (N.D. Cal. 2000) (aff’d, 8 F. App'x 663 (9th Cir. 2001)) (availability of remedies under the IRC preclude plaintiffs from bringing actions against IRS agents). “When the design of a government programs suggests that Congress has provided what it considers adequate remedial mechanisms for constitutional violations that may occur in the course of its administration, we have not created additional Bivens remedies.” Schweiker v. Chilicky, 487 U.S. 412, 423 (1988). In light of the comprehensive scheme provided by Congress to resolve tax-related disputes, nominal defendants Olsen, Crawford, Kissel and Koskinen are not subject to Bivens-type claims. Additionally, the individually named defendants should be dismissed for lack of personal jurisdiction over any individual capacity claims under Fed. R. Civ. P. 12(b)(2), because qualified immunity serves as a bar to such claims. That is, the Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 7 of 13 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 defense of qualified immunity2 protects “government officials . . . 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.” Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982). To determine whether a government official is entitled to qualified immunity, a court first must consider the threshold question: “Taken in the light most favorable to the party asserting the injury, do the facts alleged show the officer’s conduct violated a constitutional right?” Saucier v. Katz, 533 U.S. 194, 201 (2001); see also Robinson v. Solano Cnty., 278 F.3d 1007, 1013 (9th Cir. 2002). A plaintiff must allege that a “particular rather than an abstract right” was violated. Hufford v. McEnaney, 249 F.3d 1142, 1148 (9th Cir. 2001). “[R]egardless of whether the constitutional violation occurred, the [official] should prevail if the right asserted by the plaintiff was not ‘clearly established’ or the [official] could have reasonably believed that his particular conduct was lawful.” Romero v. Kitsap County, 931 F.2d 624, 627 (9th Cir.1991). The plaintiff bears the burden of proving the existence of a “clearly established” right at the time of the allegedly impermissible conduct. See Maraziti 2 Even without the defense of qualified immunity, some of the named defendants may not be subject to suit in their personal capacity in this jurisdiction. To wit, Commissioner Koskinen did not become an IRS employee until December 2013, and cannot be held personally responsible for IRS actions taken prior to his appointment. Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 8 of 13 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 v. First Interstate Bank, 953 F.2d 520, 523 (9th Cir.1992). If no constitutional right was violated, the inquiry is at an end, and the official is entitled to qualified immunity. Saucier, 533 U.S. at 201; see also Robinson, 278 F.3d at 1013. In this case, Plaintiff has not made any specific allegations of any particular right being violated by any of the named federal employees. Nor are there any allegations that any officer of the United States violated any sort of constitutional right. Plaintiff’s allegations point to nothing but the assessment and collection of taxes by the Internal Revenue Service. Plaintiff has not met his burden of proving the existence of a clearly established right with respect to the IRS collection actions here. As is the case here, no constitutional right was violated, the inquiry is at an end, and each of the named officials are entitled to qualified immunity because Plaintiff’s allegations against individually-named federal defendants relate to activities involving the collection of federal taxes. This lawsuit, if allowed to proceed at all, should proceed only against the United States. IV. This Court is without jurisdiction to hear any claim for tax refund, and leave to amend is futile, because the statute of limitations for such an action has run Congress has created legal procedures to address taxpayers’ claims relating to tax collection. Suits challenging the merits of federal taxes in federal district court must be brought only after the taxes have been paid, an administrative claim has been filed and the claim has been denied or six months have passed. See 26 U.S.C. § 7422; Flora v. United States, 362 U.S. 145, 177 (1960). Plaintiff has failed even Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 9 of 13 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 to allege that he has complied with the procedural requirements of filing a claim for refund. While the United States has waived its sovereign immunity to allow taxpayers to file suits seeking tax refunds, taxpayers must first file an appropriate claim for refund with the Secretary of Treasury in order to invoke the court’s jurisdiction in a refund suit. See 28 U.S.C. § 1346(a)(1) (waiver of sovereign immunity); 26 U.S.C. § 7422(statute authorizing refund actions); 26 U.S.C. § 6511 (statute of limitations on filing claims for refund); United States v. Dalm, 494 U.S. 596, 602 (1990) (citations omitted). The claim for refund must “set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof.” 26 C.F.R. § 301.6402-2(b)(1). The claim for refund must also be filed within the time limits set forth in 26 U.S.C. § 6511. If the claim is not acted upon, the taxpayer must wait at least six months before bringing suit, and suit must be brought not more than two years after expiration of that six-month period or rejection of the claim. 26 U.S.C. § 6532(a); Kelson v. United States, 503 F.2d 1291, 1292-1293 (10th Cir. 1974) (interpreting time restrictions in 26 U.S.C. § 6532). The gravamen of Plaintiff’s claim is that he would like a refund of taxes collected through alleged levies of social security payments. See SAC at ¶24 (“As a result of Defendant’s failure to perform, as alleged above, by the illegal taking of Kellogg’s “Social Security”, [Plaintiff] demands for Offer/Acceptance of his Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 10 of 13 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 property returned… .”) Plaintiff’s allegations are fundamentally flawed because he fails to allege having filed a timely administrative claim for refund, and the statute of limitations serves as an affirmative bar to his maintaining an action for such a refund at this time. Significantly, a claim for refund must be filed within the time limits set forth in 26 U.S.C. § 6511 - “within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later.” 26 U.S.C. 6511. Plaintiff apparently filed his tax return for the relevant period prior to 1997. See SAC at pg. 14. He is seeking a refund of taxes that were allegedly paid on various dates between March 2002 and November 2008. This means that for the last payment - made in November 2008 - he would have had to file an administrative claim for refund by November 2010. There are no allegations that any administrative claim for refund has been filed. Leave to amend would be futile because even if he were to now file an administrative claim- nearly 8 years after the final payment was received by the IRS - it would be untimely and any subsequent action for refund subject to dismissal. As a result, Plaintiff cannot avail himself of the very specific waiver of sovereign immunity under 26 U.S.C. § 7422. Accordingly, the Court should dismiss this action pursuant to Fed. R. Civ. P. 12(b)(1) as the Court lacks subject- matter jurisdiction, because Plaintiff has not plead the jurisdictional requirements Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 11 of 13 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 for a tax refund suit. See Martinez v. United States, 595 F.2d 1147, 1148 (9th Cir.1979) (per curiam); Bear Valley Mutual Water Co. v. Riddell, 493 F.2d 948, 951 (9th Cir. 1974) (taxpayer must plead jurisdictional prerequisites to tax refund suit, and failure to do so results in dismissal for lack of subject-matter jurisdiction). Similarly, Plaintiff has failed to state a valid claim for tax refund because he has not alleged the timely filing of an administrative claim for refund, and the action is subject to dismissal pursuant to Fed. R. Civ. P. 12(b)(6). Leave to amend would be futile, because he cannot cure the jurisdictional deficiencies by now filing a claim for refund nearly 8 years after the final payment was made for these nearly 20 year old tax liabilities. V. Res Judicata (claim preclusion) and/or Collateral Estoppel (issue preclusion) prevent Plaintiff from litigating tax years and issues determined in prior Tax Court cases Plaintiff refers extensively to a prior Tax Court action relating to the same tax years to which he seeks a tax refund. Res judicata (i.e. claim preclusion) bars a party from asserting a claim resolved on the merits in a previous action, including any issue that could have been raised in the first action. Commissioner v. Sunnen, 333 U.S. 591, 597 (1948). Collateral estoppel (i.e. issue preclusion) provides that “once an issue is actually and necessarily determined by a court of competent jurisdiction, that determination is conclusive in subsequent suits based on a different cause of action involving a party to the prior litigation.’” Carter v. Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 12 of 13 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Commissioner, 746 F.3d 318, 321 (7th Cir. 2014) (quoting Montana v. United States, 440 U.S. 147, 153 (1979).) Thus, to the extent that Plaintiff seeks to litigate tax years or specific tax issues that have been conclusively determined in prior Tax Court decisions, res judicata (claim preclusion) and/or collateral estoppel (issue preclusion) prevents plaintiff from doing so in this action. In short, he cannot now pursue a refund action for tax liabilities that have been previously litigated with the Tax Court. CONCLUSION Accordingly, this action should be dismissed with prejudice as to all federal defendants because this court lacks subject-matter jurisdiction over any of Plaintiff’s claims, Plaintiff has failed to state plausible facts sufficient to show he is entitled to relief, and for failure to properly serve the United States. WHEREFORE, the United States respectfully requests that the Court dismiss this action with prejudice. DATED this 22nd day of August, 2016. Respectfully submitted, CAROLINE D. CIRAOLO Principal Deputy Assistant Attorney General /s/ Nithya Senra NITHYA SENRA, SBN 291803 MAHANA K. WEIDLER Trial Attorneys, Tax Division U.S. Department of Justice Case 3:16-cv-00640-BAS-JLB Document 39-1 Filed 08/22/16 Page 13 of 13
