Montrose v. Commissioner of Internal Revenue et al

MOTION to Dismiss for Failure to State a Claimand Failure to Serve Process

D. Md.January 30, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND Northern Division LENNOX E. MONTROSE, ) ) Plaintiff, ) ) v. ) ) INTERNAL REVENUE SERVICE, et. al. ) ) Defendants. ) _____________________________________ ) Case No. 16-cv-02787 DEFENDANTS’ MOTION TO DISMISS Defendants move to dismiss this complaint for failure to serve process and failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(1),(6). Plaintiff has failed to serve process on Defendants in violation of Rule 4 of the Federal Rules of Civil Procedure and of this Court’s order, the complaint does not satisfy the pleading requirements of Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S.C. 662 (2009), and it is barred by res judicata. Plaintiff’s complaint should therefore be dismissed. A memorandum of points and authorities is attached to this motion in support thereof. // // // // // // // Case 1:16-cv-02787-JFM Document 8 Filed 01/30/17 Page 1 of 3 2 DATED: January 30, 2017 Respectfully submitted, DAVID A. HUBBERT Acting Assistant Attorney General ROD. J. ROSENSTEIN United States Attorney /s/Joycelyn S. Peyton JOYCELYN S. PEYTON Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 227 Washington, D.C. 20044 Tel: 202-514-6576 Fax: 202-514-6866 Joycelyn.S.Peyton@usdoj.gov Counsel for the United States Case 1:16-cv-02787-JFM Document 8 Filed 01/30/17 Page 2 of 3 3 CERTIFICATE OF SERVICE IT IS HEREBY CERTIFIED that service of Defendants’ Motion to Dismiss with its supporting memorandum of points and authorities has been made on January 30, 2017, via first class mail to the following recipients: LENNOX E. MONTROSE 118 North Poppleton St. Baltimore, MD 21201 Pro se /s/ Joycelyn S. Peyton JOYCELYN S. PEYTON Trial Attorney, Tax Division U.S. Department of Justice Case 1:16-cv-02787-JFM Document 8 Filed 01/30/17 Page 3 of 3 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND Northern Division LENNOX E. MONTROSE, ) ) Plaintiff, ) ) v. ) ) INTERNAL REVENUE SERVICE, et al. ) ) Defendants. ) ______________________________________ ) Case No. 16-cv-02787 MEMORANDUM IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS Defendants move to dismiss this complaint for failure to serve process and failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(1),(6). Plaintiff has failed to serve process on Defendants in violation of Rule 4 of the Federal Rules of Civil Procedure and of this Court’s order, the complaint does not satisfy the pleading requirements of Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S.C. 662 (2009), and it is barred by res judicata. Plaintiff’s complaint should therefore be dismissed. BACKGROUND On September 9, 2014, Plaintiff Lennox E. Montrose filed a complaint against the Internal Revenue Service (“Service”) seeking $37,708.57 in damages, which amount consisted of $19,704.00 of tax refunds to which Plaintiff claimed he was entitled for tax years 2007 to 2011, and $18,005.00 that Plaintiff claimed the Service demanded from him for tax years 2006 to 2008, which Plaintiff also sought to enjoin from collection. Lennox v. Commissioner of Internal Revenue Service, et al., No. 14-cv-2866 (D. Md. April 9, 2015). On April 9, 2015, this Court entered a final Memorandum Opinion and Order, which held that the Anti-Injunction Act, 26 Case 1:16-cv-02787-JFM Document 8-1 Filed 01/30/17 Page 1 of 8 2 U.S.C. 7421, barred Plaintiff from seeking an injunction, and that Plaintiff was not entitled to a refund because he had not paid any money to the Service for tax years 2007 to 2009, and the claimed refunds for tax years 2010 and 2011 had been applied to his other tax liabilities. Id. at Dkt. No. 18. Plaintiff filed a motion of reconsideration seeking to reopen the case on April 26, 2015, and the Service filed a response on May 14, 2015. Dkt. Nos. 22, 23. The response informed the Court that the Service had recently determined that Plaintiff was entitled to withholding credits for the tax years 2007 through 2009, but that he was still not entitled to a refund because the refunds for 2007 and 2008 were barred by the statute of limitations, and the 2009 refund would be applied to Plaintiff’s other tax liabilities. Id. at 23. This Court declined to reconsider its ruling or reopen the case on May 15, 2015. Id. at Dkt. No. 24. Plaintiff initiated the present suit against Defendants on August 8, 2016. Dkt. No. 1 (“Compl.”). Plaintiff is again seeking $37,708.57, this time for Defendants’ alleged failure to refund the same taxes adjudicated by this Court in the original suit and for monetary damages related to Defendants’ alleged wrongful conversion of pecuniary assets, unlawful withholding of refund monies due to the taxpayer, false light invasion of privacy, identity theft, and financial exploitation. Id. at 20. On August 18, 2016, this Court issued the summonses and entered an Order directing Plaintiff to properly serve Defendants pursuant to Fed. R. Civ. P. 4(i), or risk dismissal of his case. Dkt. Nos. 2, 3. Despite the clear direction of this Court, Plaintiff has not served process on Defendants or filed proof of service as of the filing of this motion. Rather, on November 16, 2016, Plaintiff filed a motion for summary judgment urging this Court to grant his request for monetary relief. Dkt. No. 5. This Court should instead dismiss Plaintiff’s complaint for failure Case 1:16-cv-02787-JFM Document 8-1 Filed 01/30/17 Page 2 of 8 3 to serve process, and failure to state a claim for which relief can be granted. Fed. R. Civ. P. 12(b)(1), (5). ARGUMENT Plaintiff’s complaint should be dismissed because he has not served process on Defendants in violation of Rule 4 of the Federal Rules of Civil Procedure and this Court’s order, the complaint does not satisfy the pleading requirements of Iqbal and Twombly, and it is barred by res judicata. I. FAILURE TO SERVE PROCESS To properly serve an agency of the United States, such as the Internal Revenue Service, and its agents, Plaintiff must serve a copy of the summons and complaint on the agency, the United States Attorney General, and the United States Attorney for the district in which the suit is brought via certified or registered mail. Plaintiff is also required to file proof of such service with this Court. Fed. R. Civ. P. 4(l). Failure to comply with the rules governing service of process will result in dismissal of Plaintiff’s case pursuant to Rule 4(m). Fed. R. Civ. P. 4(m). “Although notice underpins Rule 4 concerning service, notice itself cannot invalidate an otherwise defective service. Proper service is still a prerequisite to personal jurisdiction.” Grand Entertainment Group, Ltd. v. Star Media Sales, Inc., 988 F.2d 476, 492 (3d Cir. 1993). To date, Plaintiff has not served Defendants with a copy of the summons and complaint in clear violation of Rule 4, nor has he filed proof of service with this Court demonstrating his compliance with the rule. Moreover, it has been more than 120 days since this Court specifically reminded Plaintiff to properly serve Defendants and that failure to do so would result in dismissal of his case. Plaintiff therefore has no “good cause” for his failure to serve Defendants in accordance to the rules. See, e.g. Denton v. United States, 2006 WL 3783595, *2 (N.D. Ga. December 21, 2006) (explaining failure to show good cause for not serving defendants within Case 1:16-cv-02787-JFM Document 8-1 Filed 01/30/17 Page 3 of 8 4 120 days and dismissing case pursuant to Rule 4(m)). Accordingly, this case should be dismissed. II. FAILURE TO STATE A CLAIM The complaint also be fails to state a claim upon which relief can be granted because it does not satisfy the pleading requirements set forth in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S.C. 662 (2009), and because Plaintiff’s claims are barred by the doctrine of res judicata. Fed. R. Civ. P. 12(b)(6). a. The complaint violates Twombly and Iqbal. A complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Although complaints are not required to set forth detailed factual allegations, they are required to contain more than mere accusations that the plaintiff was unlawfully harmed by the defendant. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citations omitted); see also Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012). In order to survive a motion to dismiss, a complaint must offer more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action,” and must instead be supported by factual allegations. Id., 556 U.S. at 678-679 (citing Twombly, 550 U.S. at 555). A well-pleaded complaint must also be plausible on its face in light of the factual matter contained therein. Id. at 678 (internal quotation marks omitted). The complaint in this case is nothing more than the “unadorned, the-defendant- unlawfully-harmed-me accusation,” which is strictly prohibited by Rule 8 and the standard set forth in Iqbal and Twombly. Plaintiff apparently seeks relief in damages for wrongful conversion, unlawful withholding of refund monies, false light invasion of privacy, and identity theft, but fails to allege any facts showing the basis of those claims. For all but one of the claims, the complaint fails to present even a “bare recitation of the elements of the cause of Case 1:16-cv-02787-JFM Document 8-1 Filed 01/30/17 Page 4 of 8 5 action,” which itself would be insufficient to survive a motion to dismiss. Although a complaint “need not make a case against a defendant or forecast evidence sufficient to prove an element of the claim,” it must at least “allege facts sufficient to state elements of the claim.” Robertson v. Sea Pines Real Estate Cos., 679 F.3d 278, 291 (4th Cir. 2012) (emphasis in original) (internal quotation marks and citation omitted). Plaintiff’s complaint is so devoid of factual allegations to support its claims that it is impossible to determine from the face of the complaint whether the alleged wrongdoing were even possible, much less plausible.1 See id. This is exactly the kind of complaint that is now barred by the standard set forth in Iqbal and Twombly, and it should therefore be dismissed. b. The complaint is barred by res judicata. Suits on the same claim are barred from re-litigation under the doctrine of res judicata if (1) the identity or privity of the parties is the same as between the present and original suit; (2) there is substantial similarity between the claims, and (3) there is a valid final judgment on the merits in the original litigation. Barret v. Bank of America NA, 2012 WL 3775763, No. RDB- 12-0422, *3 (D. Md. Aug. 29, 2012). Further, it is a long-established principle that “if a claim of liability or non-liability relating to a particular tax year is litigated, a judgment on the merits is res judicata [sic] as to any subsequent proceeding involving the same claim and the same tax year.” C.I.R. v. Sunnen, 333 U.S. 591, 598 (1948). Finally, as the court explained in Ramey v. Potomac Elec. Power Co., 580 1 The complaint also fails to allege any waiver of sovereign immunity. Sovereign immunity is jurisdictional in nature, and absent a statute unequivocally waiving the government’s sovereign immunity, this Court lacks jurisdiction to entertain any of the damages claims asserted by Plaintiff. FDIC v. Meyer, 510 U.S. 471, 475 (1994); United States v. Sherwood, 312 U.S. 582, 587-88 (1940) (“Except as Congress has consented there is no jurisdiction in the [courts] to entertain suits against the United States.”). Case 1:16-cv-02787-JFM Document 8-1 Filed 01/30/17 Page 5 of 8 6 F. Supp. 2d 40, 43 (D.D.C. 2008), “it is the facts surrounding the transaction or occurrence which operate to constitute the cause of action, not the legal theory upon which a litigant relies. Thus, an action based on the same nucleus of facts as that of a prior action is said to share the same cause of action, and therefore is barred by claim preclusion, even if the latter action is predicated on a different legal theory.” Plaintiff’s complaint contains all the elements of a precluded claim that should be barred from re-litigation. First, the parties in the present litigation are the same as those parties in the original suit in that Plaintiff filed his original suit against the Commissioner of the Internal Revenue Service and the Internal Revenue Service, which are the same parties in the present case. See Compl.; c.f. Lennox v. Commissioner of Internal Revenue Service, et al., No. 14-cv- 2866, Dkt. No. 1 (showing an identical caption). Second, the present case is substantially similar to the original suit. Plaintiff is again seeking what amounts to a refund for $19,704.00 for tax years 2007 through 2011. See Compl. at 20 (alleging that United States is indebted to Plaintiff in the amount of $19,704 for tax years 2007 through 2011); c.f. Lennox v. Commissioner of Internal Revenue Service, et al., No. 14-cv- 2866, Dkt. Nos. 1, 18 (alleging same). Although Plaintiff is not seeking an injunction in the present litigation, Plaintiff makes the same allegations as those that he made in the original suit. See Compl. at 20 (alleging that Defendants are liable for wrongful conversion, unlawful withholding of refund monies, false light invasion of privacy, etc.); c.f. Lennox v. Commissioner of Internal Revenue Service, et al., No. 14-cv-2866, Dkt. No. 1 (alleging that Defendants engaged in “a program of terrorization upon the Plaintiff; designed to vitiate his character, malign his integrity, jeopardize his current and future business associations, and visit the horrors of extreme economic hardship and Case 1:16-cv-02787-JFM Document 8-1 Filed 01/30/17 Page 6 of 8 7 subjugations pecuniary enslavement upon him, by creating and publishing a false record of indebtedness”). Plaintiff may have changed the legal theory upon which his complaint rests, but the complaint is still based on the same allegations and same nexus of events as those in the original suit, which are barred from re-litigation. See Ramey, 580 F. Supp. 2d at 43. Further, Plaintiff does not allege that the controlling facts of the prior suit or the applicable law have changed. See C.I.R. v. Sunnen, 333 U.S. at 598-99. Although the Service later determined that Plaintiff had withholding credits for tax years 2007 through 2009, counsel for the Service informed the Court of this fact on May 14, 2015, and this Court declined to reconsider its ruling or re-open the case. Lennox v. Commissioner of Internal Revenue Service, et al., No. 14-cv-2866, Dkt. Nos. 23, 24. Finally, this Court entered a valid final judgment on the merits in the original litigation on April 9, 2015. Id. at Dkt. No. 21. Plaintiff’s complaint thus has all the elements of a claim barred by res judicata, and should therefore be dismissed. WHERFORE, Defendants respectfully request that this Court grant this motion to dismiss for failure to serve process and failure to state a claim, and dismiss Plaintiff’s complaint with prejudice. // // // // // // // Case 1:16-cv-02787-JFM Document 8-1 Filed 01/30/17 Page 7 of 8 8 DATE: January 30, 2017 Respectfully submitted, DAVID A. HUBBERT Acting Assistant Attorney General ROD J. ROSENSTEIN United States Attorney /s/Joycelyn S. Peyton JOYCELYN S. PEYTON Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 227 Washington, D.C. 20044 Tel: 202-514-6576 Fax: 202-514-6866 Joycelyn.S.Peyton@usdoj.gov Counsel for the United States Case 1:16-cv-02787-JFM Document 8-1 Filed 01/30/17 Page 8 of 8 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND Northern Division LENNOX E. MONTROSE, ) ) Plaintiff, ) ) v. ) ) INTERNAL REVENUE SERVICE, et al. ) ) Defendants. ) ______________________________________ ) Case No. 16-cv-02787 ORDER Upon consideration of Defendants’ Motion to Dismiss, it is by the United States District Court for the District of Maryland, ORDERED that Plaintiff’s complaint is DISMISSED with prejudice. DATE: _______________________ _______________________________ JUDGE J. FREDERICK MOTZ United States District Court cc: Lennox E. Montrose Pro se Joycelyn S. Peyton Counsel for Defendants Case 1:16-cv-02787-JFM Document 8-2 Filed 01/30/17 Page 1 of 1