Nero et al v. Seifert

EX PARTE MOTION to Dismiss for Failure to State a Claim

D. Ariz.January 13, 2017

1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CAROLINE D. CIRAOLO Principal Deputy Assistant Attorney General GERALD A. ROLE Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683 Washington, D.C. 20044 202-307-0461 (v) 202-307-0054 (f) Gerald.A.Role@usdoj.gov IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Chris M. Nero and ) Maria Bullock Nero, ) ) Plaintiffs, ) ) v. ) ) Ryan C. Seifert, ) ) Defendant. ) _______________________________________) Case No. 4:16-CV-00684 CKG (Removal of Case No. C20164620 from Arizona Superior Court, Pima County) MOTION TO DISMISS The United States of America, on behalf of its employee Ryan C. Seifert and through undersigned counsel, respectfully moves this Court for an order dismissing this action pursuant to Fed. R. Civ. P. 12(b)(1), (5) and (6) for failure to state a claim, improper service, and lack of jurisdiction. MEMORANDUM STATEMENT OF THE CASE Plaintiff initially brought this action in Pima County Circuit Court as “an order to show cause for preliminary injunction and emergency temporary restraining order.” This filing is Case 4:16-cv-00684-CKJ Document 10 Filed 01/13/17 Page 1 of 10 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 somewhat less than a model of clarity. As best as can be determined, plaintiffs’ factual allegations are as follows: 1. In July 2016, plaintiff Chris Nero received a letter from Revenue Officer Seifert requesting a meeting at the IRS offices and asking that Nero bring certain financial records to that meeting. (Compl. 2:10-12.) 2. Without authorization from either plaintiff, Revenue Officer Seifert obtained credit reports of plaintiffs. (Compl. 2:15.) 3. Revenue Officer Seifert levied against plaintiffs’ checking accounts “without due process of law.” (Compl. 2:16-17.) Plaintiffs’ claims are also nebulous. Untethered to any particular facts, there are allegations of false claims (Compl. 2:17), “intentional tort consisting of an injury and damage to one’s person, reputation or feelings” (Compl. 2:28-29), violation of due process (Compl. 2:31- 34; 3:8). As for relief, plaintiffs seem to be seeking monetary damages of “$10,000.00 for each Right denied, violated, or trespassed.” (Compl. 3:4). They also ask for “an Emergency Temporary Restraining Order” (Compl. 4:2), but do not say what that order should entail. To provide the Court with context, the United States asserts the following facts: 1. On February 22, 2010, plaintiff Chris Nero entered into a plea agreement in which he agreed to plead guilty to three counts of violating 26 U.S.C. §7201 (Attempted Evasion of Individual Income Taxes) for 2003, 2004, and 2005. United States v. Nero, Case No. CR 08- 744-TUC-CKG (D. Ariz.)(Doc. 202). The Court accepted the plea, and entered judgment against Nero on November 9, 2010. (Id., Doc. 271.) 2. On May 21, 2012, assessments for those three years were made against Chris Nero. (Seifert Decl. Ex. A.) A notice of Federal tax lien against Nero for those liabilities in the amount of $1,579,955.86 was filed with the Pima County Recorder on January 15, 2013. (Id.) Case 4:16-cv-00684-CKJ Document 10 Filed 01/13/17 Page 2 of 10 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3. On June 13, 2016, Revenue Officer Seifert was assigned to collect Nero’s unpaid liabilities for 2003, 2004, and 2005. (Seifert Decl. ¶ 3.) 4. On July 6, 2016, Revenue Officer Seifert sent Nero a Final Notice, a Notice of Intent to Levy, and notice of his rights to a hearing. (Seifert Decl. ¶ 4.) 5. On August 24, 2016, Revenue Officer Seifert asked his group manager to obtain Nero’s credit report so Seifert could use it to identify Nero’s assets and possible sources of income. (Seifert Decl. ¶ 10.) 6. On August 25, 2016, Revenue Officer Seifert issued levies to Nero’s employers and various financial institutions. (Seifert Decl. ¶ 11.) 7. On September 1 and 7, 2016, Revenue Officer Seifert issued summonses to various parties as an effort to verify Nero’s assets and possible sources of income. (Seifert Decl. ¶¶ 14, 16.) ARGUMENT I. PLAINTIFFS HAVE NOT EFFECTED PROPER SERVICE. The named defendant, Ryan C. Seifert, is a revenue officer with the Internal Revenue Service, being sued in his individual capacity for actions taken in the performance of his federal duties. Service should have been made according to Fed. R. Civ. P. 4(i)(3), which requires that service be made on the United States - by serving the Attorney General of the United States and the United States Attorney for the District of Arizona - and on the Revenue Officer Seifert. As only Revenue Officer Seifert received the summons and complaint, service is not complete, and plaintiffs’ action is susceptible to dismissal under Fed. R. Civ. P. 12(b)(5). II. PLAINTIFFS’ COMPLAINT FAILS TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED. In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the Supreme Court held that, "[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligations to provide the "grounds" of his "entitle[ment] to relief" Case 4:16-cv-00684-CKJ Document 10 Filed 01/13/17 Page 3 of 10 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555 (citations omitted). Subsequently, the Court elaborated on Twombly, stating that "the pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but is has not ‘show[n]’ - that the pleader is entitled to relief," id. at 679, and the complaint should be dismissed. While it is true that, in deciding a motion to dismiss under Fed. R. Civ. P. 12(b)(6), “all well-pleaded allegations of material fact are taken as true and construed in a light most favorable to the nonmoving party,” Wyler Summit Partnership v. Turner Broad. Sys. Inc., 135 F.3d 658, 661 (9th Cir.1998), the court is not “required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Spreewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.2001). Moreover, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 677. There is nothing in plaintiffs’ complaint to indicate misconduct of any kind, let alone conduct which is actionable. It should be dismissed. Plaintiffs are proceeding pro se, however, and the court of appeals has long held that “a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). As will be discussed below, amendment of the complaint would be futile. III. THE UNITED STATES IS THE CORRECT PARTY DEFENDANT. Under the Federal Tort Claims Act, 28 U.S.C. § 2671 et seq., if the Attorney General certifies that a United States employee was acting within the scope of his employment at the time Case 4:16-cv-00684-CKJ Document 10 Filed 01/13/17 Page 4 of 10 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of an incident giving rise to a civil claim, the United States is substituted as the defendant. Meridian Int'l Logistics, Inc. v. United States, 939 F.2d 740, 743 (9th Cir.1991); 28 U.S.C. §2679(d)(1). This certification may be made by the United States Attorney for the district in which the action was brought, see 28 U.S.C. §510, 28 C.F.R. § 15.4(a), and United States Attorney John S. Leonardo has done so here. (Certification of Scope of Employment of Defendant Ryan C. Seifert, attached.) To the extent plaintiffs’ complaint can be construed as asserting claims of common law torts under Arizona state law, then, the United States is the appropriate party defendant, and defendant Seifert should be dismissed as a party. IV. NO RELIEF CAN BE GRANTED UNDER THE FTCA. As the sovereign, the United States cannot be sued without its express consent. United States v. Testan, 424 U.S. 392, 399 (1976); United States v. Shaw, 309 U.S. 495, 500-01 (1940). Once sovereign immunity has been waived, the suit must comply exactly with the terms of the statute. United States v. Mitchell, 445 U.S. 535, 538 (1980), United States v. Sherwood, 312 U.S. 584, 586 (1941); Berti v. V.A. Hospital, 860 F.2d 338, 339-40 (9th Cir. 1988); Eastern Associated Coal Corp. v. Director, Office of Workers' Compensation Programs, 791 F.2d 1129, 1131 (4th Cir. 1986); Carelli v. IRS, 668 F.2d 902, 904 (6th Cir. 1982); Cole v. United States, 657 F.2d 107, 109 (7th Cir. 1981). Any waiver of sovereign immunity must be construed strictly in favor of the sovereign and not enlarged beyond what the language requires. United States v. Nordic Village, Inc., 503 U.S. 30, 33-34 (1992); Siddiqui v. United States, 359 F.3d 1200, 1204 (9th Cir. 2004). The FTCA waives the government’s sovereign immunity to allow claims against the United States for personally injury resulting from the negligent or wrongful acts of its employees while acting within the scope of their employment. The statute contains exceptions, however, which are contained in 28 U.S.C. §2680. One such exception is that the Act shall not apply to “[a]ny claim arising in respect of the assessment or collection of any tax or custom duty,” 28 Case 4:16-cv-00684-CKJ Document 10 Filed 01/13/17 Page 5 of 10 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 U.S.C. § 2680(c), and this language “covers a broad range of activity by the IRS”. Smith v. Brady, 972 F.2d 1095, 1099 (9th Cir. 1992). The actions by Revenue Officer Seifert - issuing levies and administrative summons, meeting with the taxpayer, investigating the taxpayer’s income and assets - all fall squarely within the realm of tax collection activity, and therefore are not actionable under 28 U.S.C. § 2680(c). V. OTHER STATUTORY REMEDIES ARE UNAVAILABLE. Plaintiffs’ complaint does not identify any violation of statute or regulation by Revenue Officer Seifert. Even if it did, the exclusive remedy for unauthorized collection activities is an action brought under 26 U.S.C. § 7433, and this action can only be brought against the United States, not individual employees, such as Revenue Officer Seifert. Like the FTCA, Section 7433 is a waiver of sovereign immunity, and a plaintiff’s action must comply strictly with its terms. One of those terms in this statute is a requirement that the plaintiff first exhaust his administrative remedies before bringing suit. 26 U.S.C. § 7433(d)(1); Conforte v. United States, 979 F.2d 1375, 1377 (9th Cir. 1992). This is done by filing an administrative claim with the Area Director in which the taxpayer resides, and the claim must include, inter alia, the grounds for the claim, a description of the injuries incurred by the claimant, the dollar amount of the claim, and substantiating documentation. 26 C.F.R. §301.7433-1(e); Venen v. United States, 38 F.3d 100, 103 (3d Cir. 1994). There is nothing in plaintiffs’ filing here which indicates that such a claim was filed. Absent a claim, plaintiffs’ administrative remedies have not been exhausted. Even if they filed an administrative claim and the IRS had subsequently denied it, plaintiffs’ complaint still would not state a claim under that statute. Section 7433 states: If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence, disregards any provision of this title, or any regulation promulgated under this title, such taxpayer may bring a civil action Case 4:16-cv-00684-CKJ Document 10 Filed 01/13/17 Page 6 of 10 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 for damages against the United States in a district court of the United States. 26 U.S.C. § 7433(a). Plaintiffs’ complaint does not allege that there has been any violation of any provision of the Internal Revenue Code or its implementing regulations. Thus, even if plaintiffs had exhausted their administrative remedies, their complaint fails to state a claim against the United States under section 7433. VI. THERE IS NO BIVENS REMEDY While plaintiffs’ complaint makes vague assertions of violations of due process and other constitutional rights, it alleges no specific behavior on the part of Revenue Officer Seifert which violated those rights. The Supreme Court has held that Federal officials may be held personally liable for actions taken under the color of government authority which violate individuals’ constitutional rights. Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971). However, “Bivens remedies are not available to compensate plaintiffs for all constitutional torts committed by federal officials.” W. Cent. For Journalism v. Cederquist, 235 F.3d 1153, 1156 (9th Cir. 2000). A Bivens action does not lie where Congress has created a comprehensive federal program with a meaningful statutory mechanism for relief from wrongs committed within that program. Schweiker v. Chilicky, 487 U.S. 412, 423 (1988); Bush v. Lucas, 462 U.S. 367, 368 (1983); Berry v. Hollander, 925 F.2d 311, 313 (9th Cir. 1991). The Court of Appeals has held that Bivens relief is unavailable for plaintiffs against IRS officials “[b]ecause the Internal Revenue Code gives taxpayers meaningful protections against government transgressions in tax assessment and collection”. Adams v. Johnson, 355 F.3d 1179, 1186 (9th Cir. 2004). And, indeed, 26 U.S.C. § 7433, discussed above, is one of those statutory protections. Even if Bivens relief were available, Revenue Officer Seifert would be entitled to qualified immunity, as plaintiffs have alleged no facts which would support a finding that there was a violation of clearly established rights. Chavez v. United States, 683 F.3d 1102, 1108 (9th Case 4:16-cv-00684-CKJ Document 10 Filed 01/13/17 Page 7 of 10 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Cir. 2012). Thus, to the extent that plaintiffs’ complaint can be read to assert constitutional violations against Revenue Officer Seifert, those claims must be dismissed. VII. INJUNCTIVE RELIEF IS UNAVAILABLE. As noted above, plaintiffs include injunctive relief in the "Relief Sought" section of their complaint (Compl.4:2), but do not identify exactly what relief they seek. It really does not matter, because any conceivable relief would be barred by the Anti-Injunction Act, 26 U.S.C. §7421. While providing for adjudication of a very limited number of issues, none of which applies here,1 the Anti-Injunction Act states that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person." 26 U.S.C. §7421. The Act furthers the policy of enabling the government to collect taxes expeditiously with a minimum of pre-enforcement judicial interference, with the legal right to any disputed sums determined post-collection in a refund suit. See Bob Jones University v. Simon, 416 U.S. 725, 736 (1974). The Supreme Court has found a limited exception to the Anti-Injunction Act, where the taxpayer establishes both that the Government could not prevail under any set of circumstances on the underlying tax liability and that there is equity jurisdiction, that is, that the taxpayer would suffer irreparable injury and has no adequate remedy at law. Enochs v. Williams 1 The Anti-Injunction Act does not apply to: timely filed actions in the United States Tax Court, 26 U.S.C. §§6212(a) and (c), 6213(a); review of petitions in the Tax Court for "innocent spouse" relief, 26 U.S.C. § 6015(e); adjustments to partnership items and assessments of deficiencies attributable to partnership items which are not made in accordance with 26 U.S.C. §§ 6225(a) and 6246(a); levies made during the pendency of proceedings for the refund of a divisible tax in violation of 26 U.S.C. § 6331(i); adjudications of penalties assessed under 26 U.S.C. §§ 6672 and 6694(c) where taxpayer has filed a claim for refund and posted bond within thirty days of the day on which the notice and demand has been made, 26 U.S.C. §§ 6672(c), 6694(c); wrongful levy actions brought by persons other than the taxpayer, 26 U.S.C. §7426(a) and (b)(1); judicial review of jeopardy assessments, 26 U.S.C. § 7429(b); proceedings to determine employment status pursuant to 26 U.S.C. § 7436; and actions to enjoin a levy if it is begun during the period when collection is to be suspended under 26 U.S.C. § 6330(e)(1) as a result of a taxpayer’s request for a hearing under section 26 U.S.C. § 6330(a)(3)(B). See 26 U.S.C. § 7421(a). Case 4:16-cv-00684-CKJ Document 10 Filed 01/13/17 Page 8 of 10 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Packing and Navigation Co., 370 U.S. 1, 7 (1962); Commissioner v. Shapiro, 424 U.S. 614, 622- 23 (1976); Bob Jones University, 416 U.S. at 737; Alexander v. "Americans United," Inc., 416 U.S. 752, 758 (1974). The Supreme Court has since held that the Anti-Injunction Act "was intended to apply only when Congress has not provided an alternative avenue for an aggrieved party to litigate its claims on its own behalf." South Carolina v. Regan, 465 U.S. 367, 381 (1984). Plaintiffs’ complaint provides no facts which would trigger an exception to the Act. And, as with any conceivable claims for wrongful collection or which sound in tort, any injunctive relief would have to be against the party on whose behalf the taxes are being collected, the United States, and not against Revenue Officer Seifert. CONCLUSION For the forgoing reasons, the United States should be substituted as the proper party defendant in this action, Revenue Officer Ryan Seifert should be dismissed as a defendant, and this action should be dismissed for lack of jurisdiction, improper service, and failure to state a claim. Dated: January 13, 2017. Respectfully submitted, CAROLINE D. CIRAOLO Principal Deputy Assistant Attorney General /s/ Gerald A. Role GERALD A. ROLE (IL #6198922) Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683 Washington, D.C. 20044 Telephone: (202) 307-0461 Fax: (202) 307-0054 Email: gerald.a.role@usdoj.gov Case 4:16-cv-00684-CKJ Document 10 Filed 01/13/17 Page 9 of 10 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATE OF SERVICE IT IS CERTIFIED that the foregoing was served this 13th day of January, 2017, by mailing true and correct copies thereof, postage prepaid, addressed to: Chris M. Nero 2570 West Whisbrook Lane Tucson, Arizona 85741 Maria Bullock Nero 2570 West Whisbrook Lane Tucson, Arizona 85741 /s/ Gerald A. Role GERALD A. ROLE Case 4:16-cv-00684-CKJ Document 10 Filed 01/13/17 Page 10 of 10 Case 4:16-cv-00684-CKJ Document 10-1 Filed 01/13/17 Page 1 of 2 Case 4:16-cv-00684-CKJ Document 10-1 Filed 01/13/17 Page 2 of 2 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 1 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 2 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 3 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 4 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 5 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 6 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 7 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 8 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 9 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 10 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 11 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 12 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 13 of 14 Case 4:16-cv-00684-CKJ Document 10-2 Filed 01/13/17 Page 14 of 14