Saepoff v. Riehle et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM and for lack of subject matter jurisdiction

W.D. Wash.April 28, 2017

DEFENDANT WELLS FARGO BANK’S MOTION TO DISMISS (NO. 2:17-CV-00482-JLR) - 1 PETERSON RUSSELL KELLY PLLC 1850 Skyline Tower – 10900 NE Fourth Street Bellevue, Washington 98004-8341 TELEPHONE (425) 462-4700 FAX (425) 451-0714 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 26 27 105981 113 hd28ep30f0 Honorable Judge James L. Robart UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON JESSICA SAEPOFF, in propia persona, Plaintiff, vs. JAY RIEHLE, Revenue Officer, individually and in his capacity as employee of the United States, Internal Revenue Service; THOMAS A. BYRD, Revenue Officer, individually and in his capacity as employee of the United States, Internal Revenue Service; JOHN KOSKINEN, Commissioner of Internal individually and in his official capacity as the Secretary of Treasury, of the UNITED STATES, as supervisory agent of the INTERNAL REVENUE SERVICE an Agency of the United States; UNITED STATES, as a body corporate, individually as supervisory agent of the Internal Revenue Service and Secretary of Treasury; PREMERA BLUE CROSS, as a body corporate licensed to do business in Washington State; DELTA DENTAL of WASHINGTON, as a body corporate licensed to do business in Washington State; AETNA LIFE INSURANCE COMPANY, as a body corporate licensed to do business in Washington State; BANK OF AMERICA NA, as a body corporate licensed to do business in Washington State; WELLS FARGO BANK NA, as a body corporate licensed to do business in Washington State; JOHN AND No.: 2:17-cv-00482-JLR DEFENDANT WELL FARGO BANK’S MOTION TO DISMISS NOTE ON MOTION CALENDAR: May 26, 2017 Case 2:17-cv-00482-JLR Document 28 Filed 04/28/17 Page 1 of 6 DEFENDANT WELLS FARGO BANK’S MOTION TO DISMISS (NO. 2:17-CV-00482-JLR) - 2 PETERSON RUSSELL KELLY PLLC 1850 Skyline Tower – 10900 NE Fourth Street Bellevue, Washington 98004-8341 TELEPHONE (425) 462-4700 FAX (425) 451-0714 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 26 27 105981 113 hd28ep30f0 JANE DOES, 1-50 as may be found in Discovery, Defendants. I. INTRODUCTION Defendant Wells Fargo Bank, N.A., (“Wells Fargo”) moves under Fed. R. Civ. P. 12(b)(6) and 12(b)(1) to dismiss the claims against it for lack of subject matter jurisdiction and failure to state a claim.1 Plaintiff Jessica Saepoff (Ms. Saepoff) seeks to recover damages from Wells Fargo for complying with an IRS levy, but 26 U.S.C. § 6332 bars this claim as a matter of law.2 To the extent that Ms. Saepoff also seeks to enjoin Wells Fargo from complying with any future IRS levies, the Anti-Injunction Act, 26 U.S.C. § 7421, deprives this Court of jurisdiction to hear her claim.3 Thus, Ms. Saepoff’s claims against Wells Fargo are fatally flawed as a matter of law, and should be dismissed with prejudice. II. FACTS Ms. Saepoff’s Complaint alleges that the IRS is illegally attempting to collect income taxes which are not due.4 As to Wells Fargo, Ms. Saepoff alleges that it breached a fiduciary duty to her by surrendering to the IRS $3,825.35 in an account or accounts belonging to Ms. Saepoff, in the absence of a court order and judgment.5 Charitably construed, Ms. Saepoff’s Complaint may also seek to enjoin Wells Fargo from complying with any future IRS levy.6 1 The arguments Wells Fargo makes below are similar to those previously presented to the Court by Defendant Premera Blue Cross in its Motion to Dismiss (Dkt. No. 13). 2 26 U.S.C. § 6332(e) states in part that third parties who comply with an IRS levy “shall be discharged from any obligation or liability to the delinquent taxpayer.” 3 26 U.S.C. § 7421(a) states in part that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person.” Although this provision lists certain exceptions, none apply to this case. 4 See Complaint (Dkt. No. 1), at ¶¶ 1-70. As Premera notes in its Motion to Dismiss (Dkt. No. 13), at p. 2., Ms. Saepoff’s claims against the IRS are properly characterized as “frivolous tax arguments.” See also “The Truth about Frivolous Arguments,” at https://www.irs.gov/tax-professionals/the-truth-about-frivolous-tax-argument-introduction. 5 Complaint (Dkt. No. 1) at ¶ 89, ¶¶ 113-115. 6 Id. at pp. 26-27, ¶¶ 1-2. Case 2:17-cv-00482-JLR Document 28 Filed 04/28/17 Page 2 of 6 DEFENDANT WELLS FARGO BANK’S MOTION TO DISMISS (NO. 2:17-CV-00482-JLR) - 3 PETERSON RUSSELL KELLY PLLC 1850 Skyline Tower – 10900 NE Fourth Street Bellevue, Washington 98004-8341 TELEPHONE (425) 462-4700 FAX (425) 451-0714 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 26 27 105981 113 hd28ep30f0 III. ARGUMENT To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”7 A claim has “facial plausibility” only “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”8 Dismissal without leave to amend is proper under Rule 12(b)(6) when “it is clear that the complaint could not be saved by any amendment.”9 Even construed liberally, Ms. Saepoff’s Complaint against Wells Fargo must be dismissed with prejudice, because the legal theory underpinning her claims is irredeemably flawed. A notice of levy served by the IRS upon a third party “gives the IRS the right to all property levied upon . . . and creates a custodial relationship between the person holding the property and the IRS so that the property comes into the constructive possession of the Government.”10 If the custodian refuses to surrender property subject to the levy, it becomes liable to the Government for the amount of the property levied or the taxpayer’s liability (whichever is less), statutory interest, and a fifty percent penalty.11 On the other hand, a custodian which honors the levy “shall be discharged from any obligation or liability to the delinquent taxpayer and any other person with respect to such property or rights to property arising from such surrender or payment.”12 In keeping with 26 U.S.C. § 6332(e), the courts have consistently held that a third party that surrenders property in compliance with an IRS levy is absolutely immune from liability to the taxpayer arising from that compliance.13 Critically, such immunity applies even if the 7 Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). 8 Id. (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). 9 Harris v. Amgen, Inc., 573 F.3d 728, 737 (9th Cir.2009) (citation and quotation marks omitted). 10 United States v. Nat'l Bank of Commerce, 472 U.S. 713, 720, 105 S. Ct. 2919, 2924, 86 L. Ed. 2d 565 (1985). 11 26 U.S.C. § 6332(d). 12 26 U.S.C. § 6332(e). 13 See, e.g., Cauchi v. Brown, 51 F. Supp. 2d 1014, 1017 (E.D. Cal. 1992). See also Smith v. Kitchen, 156 F.3d 1025, 1029 (10th Cir. 1995), and Kentucky ex rel. United Pac. Ins. Co. v. Laurel County, 805 F.2d 628, 636 (6th Cir. 1986). Case 2:17-cv-00482-JLR Document 28 Filed 04/28/17 Page 3 of 6 DEFENDANT WELLS FARGO BANK’S MOTION TO DISMISS (NO. 2:17-CV-00482-JLR) - 4 PETERSON RUSSELL KELLY PLLC 1850 Skyline Tower – 10900 NE Fourth Street Bellevue, Washington 98004-8341 TELEPHONE (425) 462-4700 FAX (425) 451-0714 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 26 27 105981 113 hd28ep30f0 underlying tax liability is disputed or the levy is defective in some regard.14 Accordingly, Wells Fargo is absolutely immune from liability for damages to Ms. Saepoff under 26 U.S.C. § 6332(e). Moreover, to the extent Ms. Saepoff may be seeking to enjoin Wells Fargo from complying with any IRS levy going forward, such a claim is barred by the Anti-Injunction Act, 26 U.S.C. § 7421(a), which deprives courts of jurisdiction to hear any suit to restrain the assessment or collection of a federal tax.15 Thus, there is no legal basis for Ms. Saepoff’s claims against Wells Fargo for either monetary or injunctive relief, and her Complaint against Wells Fargo should be dismissed with prejudice pursuant to Fed. R. Civ. P. 12(b)(6) and 12(b)(1). IV. CONCLUSION Ms. Saepoff’s claims against Wells Fargo are barred by clearly established federal law. Because her claims cannot be saved by any amendment of her Complaint, they should be dismissed with prejudice. DATED: April 28, 2017. PETERSON RUSSELL KELLY, PLLC By: /s/ Michael S. DeLeo Michael S. DeLeo, WSBA # 22037 Attorneys for Defendant Wells Fargo Bank 14 See, e.g., Melton v. Teachers Ins. & Annuity Ass’n of America, 114 F.3d 557, 560-61 (5th Cir. 1997) (observing that the only defenses for failure to comply with a levy are that the custodian is not in possession of the property or that the property is already subject to attachment), and Schiff v. Simon & Schuster, Inc., 780 F.2d 210, 212 (2nd Cir. 1985) (noting that “[t]he fact that appellant disputes the validity of the underlying tax assessment does not alter [the third party’s] obligation to honor the levy”). 15 See, e.g., States v. Badger, 930 F.2d 754, 756 (9th Cir. 1991) (holding that “if any person wishes to contest [an IRS] levy, that person must bring a wrongful levy action under I.R.C. § 7426 or other provisions specified in the Anti- Injunction Act”). This action is not (and could not be) brought under 26 U.S.C. § 7426, because Ms. Saepoff is not a person “other than the person against whom is assessed the tax out of which such levy arose.” Similarly, none of the other exceptions listed in 26 U.S.C. § 7421(a) apply to Ms. Saepoff’s claims. Case 2:17-cv-00482-JLR Document 28 Filed 04/28/17 Page 4 of 6 DEFENDANT WELLS FARGO BANK’S MOTION TO DISMISS (NO. 2:17-CV-00482-JLR) - 5 PETERSON RUSSELL KELLY PLLC 1850 Skyline Tower – 10900 NE Fourth Street Bellevue, Washington 98004-8341 TELEPHONE (425) 462-4700 FAX (425) 451-0714 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 26 27 105981 113 hd28ep30f0 CERTIFICATE OF SERVICE I certify that I caused to be served in the manner noted below a copy of the foregoing pleading on the following individual(s): Jessica Saepoff P.O. Box 846 Mercer Island, WA 98040 E-Mail: jpsaepoff@gmail.com [ ] Via Facsimile [X] Via First Class Mail [ ] Via Messenger [X] Via Email [ ] Via CM/ECF Electronic Notice I certify that I caused to be served in the manner noted below a copy of the foregoing pleading on the following individual(s) via the Court’s ECF system: James C. Crumlish, III ELLIOTT GREENLEAF, P.C. 925 HARVEST DRIVE,SUITE 300 BLUE BELL, PA 19422 jcc@elliottgreenleaf.com Assigned: 04/26/2017 LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED representing Aetna Life Insurance Company (Defendant) Thomas J. Elliott ELLIOTT GREENLEAF, P.C. 925 HARVEST DRIVE,SUITE 300 BLUE BELL, PA 19422 txe@elliottgreenleaf.com Assigned: 04/26/2017 LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED representing Aetna Life Insurance Company (Defendant) Katherine A. Heaton DLA PIPER US LLP (WA) 701 FIFTH AVE STE 7000 SEATTLE, WA 98104-7044 katherine.heaton@dlapiper.com Assigned: 04/20/2017 ATTORNEY TO BE NOTICED representing Delta Dental of Washington (Defendant) Stellman Keehnel DLA PIPER US LLP (WA) 701 FIFTH AVE STE 7000 SEATTLE, WA 98104-7044 stellman.keehnel@dlapiper.com representing Delta Dental of Washington (Defendant) Case 2:17-cv-00482-JLR Document 28 Filed 04/28/17 Page 5 of 6 DEFENDANT WELLS FARGO BANK’S MOTION TO DISMISS (NO. 2:17-CV-00482-JLR) - 6 PETERSON RUSSELL KELLY PLLC 1850 Skyline Tower – 10900 NE Fourth Street Bellevue, Washington 98004-8341 TELEPHONE (425) 462-4700 FAX (425) 451-0714 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 26 27 105981 113 hd28ep30f0 Assigned: 04/20/2017 LEAD ATTORNEY ATTORNEY TO BE NOTICED Daniel J. Oates MILLER NASH GRAHAM & DUNN LLP (SEA) 2801 ALASKAN WAY STE 300 PIER 70 SEATTLE, WA 98121-1128 Dan.Oates@millernash.com Assigned: 04/12/2017 ATTORNEY TO BE NOTICED representing Bank of America, NA (Defendant) Gwendolyn C. Payton LANE POWELL PC 1420 FIFTH AVENUE SUITE 4200 SEATTLE, WA 98111-9402 paytong@lanepowell.com Assigned: 04/04/2017 ATTORNEY TO BE NOTICED representing Premera Blue Cross (Defendant) Brittany F Stevens GORDON & REES LLP 701 FIFTH AVENUE SUITE 2100 SEATTLE, WA 98104 bstevens@gordonrees.com Assigned: 04/27/2017 LEAD ATTORNEY ATTORNEY TO BE NOTICED representing Aetna Life Insurance Company (Defendant) Sarah N Turner GORDON & REES (WA) 701 FIFTH AVE STE 2100 SEATTLE, WA 98104 sturner@gordonrees.com Assigned: 04/26/2017 ATTORNEY TO BE NOTICED representing Aetna Life Insurance Company (Defendant) Rika Valdman US DEPARTMENT OF JUSTICE (TAX - BOX 683) PO BOX 683 BEN FRANKLIN STATION WASHINGTON, DC 20044-0683 rika.valdman@usdoj.gov Assigned: 04/20/2017 ATTORNEY TO BE NOTICED representing United States (Defendant) DATED: April 28, 2017, at Bellevue, Washington. /s/ Jenny Lebeau Jenny Lebeau, Paralegal Case 2:17-cv-00482-JLR Document 28 Filed 04/28/17 Page 6 of 6