Opinion
Civil Action No. 01-D-1625 (CBS)
June 4, 2002
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
THIS MATTER comes before the court on the United States' Motion to Dismiss (filed September 24, 2001). Pursuant to the August 24, 2001 Order of Reference, this civil action was referred to the Magistrate Judge to, inter alia, "submit proposed findings of fact and recommendations for rulings on dispositive motions." The court has reviewed the Motion to Dismiss, Petitioner Brown's "Affidavit of Points and Authorities . . ." (filed October 29, 2001), the pleadings, the entire case file, and the applicable law and is sufficiently advised in the premises. For the reasons discussed below, it is recommended that the Motion to Dismiss be granted and that Brown's "Verified Petition for Writ of Mandamus" ("the Petition") be dismissed with prejudice.
I. Background
Brown, pro Se, alleges that he "is domiciled" and "engaged in a private, non-governmental occupation" in El Paso County, Colorado. (Declaration attached to Petition ¶¶ 3, 4). Brown alleges that a Notice of Federal Tax Lien containing unspecified errors was received by a credit reporting agency in 1993. (Declaration ¶ 6). Brown appears to allege that he is not subject to federal tax laws. (Declaration ¶ 8). Brown seeks a writ compelling the Internal Revenue Service ("IRS") to (1) release levies and liens relating to 1993; (2) return unspecified property to Brown; and (3) cease and desist future tax collections against him. (Petition p. 5).
The United States moves to dismiss the Petition pursuant to Fed.R.Civ.P. 12(b) for lack of subject matter jurisdiction and failure to state a claim upon which relief may be granted based on several reasons: (1) this court does not have jurisdiction over this case because it was dismissed by the state court prior to removal to federal court; (2) the United States is the sole proper Defendant; (3) the Petition is barred by the Anti-Injunction Act, 26 U.S.C. § 7421(a); (4) the Petition is barred by the Declaratory Judgment Act, 28 U.S.C. § 2201; (5) the court lacks subject matter jurisdiction over this action due to Brown's failure to establish a waiver of sovereign immunity; and (6) to the extent Brown asserts any claim under the Federal Tort Claims Act (FTCA), he is prohibited from suing the government or its employees under the FTCA for tax collection matters and he has not complied with the jurisdictional administrative prerequisites for filing a claim under the FTCA.
II. Standard of Review
First, pro se pleadings are to be construed liberally. Haines v. Kerner, 404 U.S. 519, 520-21 (1972). However, a pro se litigant's "conclusory allegations without supporting factual averments are insufficient to state a claim upon which relief can be based." Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991).
empowers a court to dismiss a complaint for "lack of jurisdiction over the subject matter." As courts of limited jurisdiction, federal courts may only adjudicate cases that the Constitution and Congress have granted them authority to hear. See U.S. CONST. art. III, § 2; Morris v. City of Hobart, 39 F.3d 1105, 1110 (10th Cir. 1994). Statutes conferring jurisdiction on federal courts are to be strictly construed. F S Construction Co. v. Jensen, 337 F.2d 160, 161 (10th Cir. 1964). If a Rule 12(b)(1) motion to dismiss merely challenges the sufficiency of the allegations in the complaint, the court must accept those allegations as true, see Holt v. United States, 46 F.3d 1000, 1002-1003 (10th Cir. 1995), but "without regard to mere conclusionary allegations of jurisdiction." Groundhog v. Keeler, 442 F.2d 674, 677 (10th Cir. 1971). A party may attack the factual assertions regarding subject matter jurisdiction through affidavits and other documents. Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995). Although the district court may consider evidence outside the pleadings, generally the motion is not converted to one for summary judgment pursuant to Rule 56. Id. The burden of establishing subject-matter jurisdiction is on the party asserting jurisdiction. Basso v. Utah Power and Light Co., 495 F.2d 906, 909 (10th Cir. 1974).
American Fair Credit Ass'n v. United Credit Nat. Bank, 132 F. Supp.2d 1304, 1308-09 (D.Colo. 2001).
For purposes of a motion to dismiss under Rule 12(b)(6),
the pleading is construed in the light most favorable to the non-moving party, and its allegations are taken as true. See, e.g., Daigle v. Shell Oil Co., 972 F.2d 1527, 1533 (10th Cir. 1992). The court considers whether the allegations set forth in the pleading constitute a statement of a claim under Rule 8(a) of the Federal Rules of Civil Procedure. See 5A Charles A. Wright Arthur R. Miller, Federal Practice and Procedure § 1363, at 460 (2d ed. 1990). Rule 8(a) provides that the pleading need only set out a generalized statement of facts from which the opposing party will be able to frame a responsive pleading. Fed.R.Civ.P. 8(a). Thus, in appraising the sufficiency of the allegations, "the [pleading] should not be dismissed for failure to state a claim unless it appears beyond doubt that [plaintiff] can prove no set of facts in support of his claim that would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); see Daigle, 972 F.2d at 1533. Additionally, the court must determine if plaintiffs allegations provide any basis for relief on any possible theory, as the court should not dismiss a complaint merely because plaintiffs allegations do not support the particular legal theory on which the plaintiff intends to proceed. See 5A Charles A. Wright Arthur R. Miller, § 1357, at 336-37.
Pierce v. Delta County Department of Social Services, 119 F. Supp.2d 1139, 1146 (D.Colo. 2000).
III. Analysis
A. Lack of Subject Matter Jurisdiction Based on Dismissal of Case in State Court
Brown commenced this civil action by filing the Petition in the District Court, County of El Paso, Colorado on June 8, 2001. A copy of the Petition was delivered to the IRS on July 13, 2001. The United States Department of Justice Tax Division received a copy of the Petition on July 23, 2001. On August 17, 2001, the United States filed its Notice of Removal.
Unknown to the United States, on June 12, 2001, prior to the filing of the Notice of Removal, the state court dismissed the Petition. (See Exhibit A to United States' Motion). On July 31, 2001, the state court denied Brown's "Motion to Reopen" the case. (See Exhibit B to United States' Motion).
"Fundamental to the right of removal is the requirement that there be a case to remove." MHM Sponsors Co. v. Permanent Mission of Pakistan to United Nations, 672 F. Supp. 752, 753 (S.D.N.Y. 1987). "There is generally no jurisdiction to remove closed cases, because if a case is closed, no case or controversy exists." Zilinger v. Allied American Insurance Co., 957 F. Supp. 148, 149 (N.D.Ill. 1997) (internal quotation marks and citation omitted). Because the state court dismissed this action on June 12, 2001 and has not restored it to the calendar, there was no action pending in state court on August 17, 2001 that was removable. See Bradigan v. Office and Professional Employees International Union, Local 153, AFL-CIO, 879 F. Supp. 7, 9 (N.D.N.Y. 1995). At the time of filing of the Notice of Removal, there was no case or controversy for the federal court to decide. Therefore, this court lacks subject matter jurisdiction over this civil action.
Should the District Judge determine that this court lacks subject matter jurisdiction over this civil action because the case had been dismissed by the state court prior to removal to federal court, it is unnecessary to consider the remaining grounds for dismissal set forth in this Recommendation.
B. Suit against Respondents in their Individual or Official Capacities
Brown seeks injunctive relief and monetary damages from Respondents. The Petition states that Brown is suing the District Director solely in his individual capacity. (Petition p. 1). The Petition does not state whether Brown is suing "Does I-XX" in their official capacities, their individual capacities, or both. The Petition seeks release of IRS liens and cessation of IRS collection activity and clearly is based on actions taken by IRS employees in the scope of their official duties. See Houston v. Reich, 932 F.2d 883, 885 (10th Cir. 1991) (the court should review the "course of the proceedings" to determine in what capacity a public official defendant is being sued) (quoting Kentucky v. Graham, 473 U.S. 159, 167 (1985)) (internal quotation omitted). Brown's Petition against Defendants in their official capacities as agents or employees of the Internal Revenue Service ("IRS") is properly construed as a claim against the United States. Atkinson v. O'Neill, 867 F.2d 589, 590 (10th Cir. 1989). Therefore, the District Director and "Does I-XX" are properly dismissed from this civil action.
In addition, there is no provision in the Federal Rules of Civil Procedure for the naming of fictitious or anonymous parties in a lawsuit. Watson v. Unipress, Inc., 733 F.2d 1386, 1388 (10th Cir. 1984); Coe v. U.S. Dist. Court for Dist. of Colorado, 676 F.2d 411, 415 (10th Cir. 1982). To the contrary, the Federal Rules provide:
"[e]very pleading shall contain a caption setting forth the name of the court, the title of the action, the file number, and a designation as in Rule 7(a). In the complaint, the title of the action shall include the names of all the parties. . . ."
Fed.R.Civ.P. 10(a). Because anonymous parties are not permitted by the Federal Rules and Brown has not identified the anonymous Doe Defendants, "Does I-XX" are properly dismissed from this action.
C. Availability of Declaratory or Injunctive Relief
To the extent that Brown seeks either declaratory relief finding that he is not subject to the federal tax laws or injunctive relief restraining the IRS from assessing and collecting tax deficiencies and penalties, the court lacks jurisdiction over the subject matter of the claims. Brown's claim for injunctive and declaratory relief is barred by the Anti-Injunction Act, 26 U.S.C. § 7421, and the Declaratory Judgment Act, 28 U.S.C. § 2201. The prohibitions of the Acts are co-extensive. Bob Jones University v. Simon, 416 U.S. 725, 732, n. 7 (1974).
1. The Anti-Injunction Act provides that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed." 26 U.S.C. § 7421(a). The purpose of the Anti-Injunction Act is to allow the government to conduct its business expeditiously in the assessment and collection of taxes without judicial intervention and to require that a taxpayer challenging the assessment and collection of taxes against him must first file a claim for a refund with the IRS. Wyoming Trucking Association, Inc. v. Bentsen, 82 F.3d 930, 933 (10th Cir. 1996) (citing Enochs v. Williams Packing Navigation Co., 370 U.S. 1, 7 (1962)). If the taxpayer does not prevail in the administrative proceeding, he may then file a suit for a refund in federal district court. See 26 U.S.C. § 7422; 28 U.S.C. § 1346(a)(1).
In addition to certain statutory exceptions neither pled nor applicable here, the Supreme Court has created a "judicial exception" to the Anti-Injunction Act which allows a taxpayer to seek injunctive relief "if the taxpayer demonstrates that: under no circumstances could the government establish its claim to the asserted tax; and . . . equity jurisdiction otherwise exists." Williams Packing, 370 U.S. at 7. Equity jurisdiction exists if the taxpayer shows that he would suffer irreparable injury without the injunction. Commissioner of Internal Revenue v. Shapiro, 424 U.S. 614, 627 (1976) (citing Williams Packing, 370 U.S. at 7).
See 26 U.S.C. § 6212(a) (c); 6213(a); 6672(b); 6694(c); 7426(a) (b)(1); and 7429(b) (providing for actions related to redeterminations, stays, levies, and refunds in specified circumstances).
First, Brown does not allege that his claim falls within the judicial exception to the Anti-Injunction Act found in Williams Packing, 370 U.S. at 7. Second, Brown fails to satisfy either prong of the Williams Packing exception to the Anti-Injunction Act. Brown cannot demonstrate that under no circumstances could the government establish its claim to the asserted tax. Brown's allegations state a common theme that the IRS has no authority or jurisdiction over him and thus cannot impose, assess, or collect income taxes from him. The United States Court of Appeals for the Tenth Circuit has found this contention to be "completely lacking in legal merit and patently frivolous." Lonsdale, 919 F.2d 1440, 1448 (10th Cir. 1990). Brown has not indicated that he has filed a claim for refund with the IRS, nor, because he has the remedy of a refund suit available, has he shown that such a remedy is inadequate to redress any asserted injuries. Accordingly, this court may not exercise its equity jurisdiction over Brown's claim. See Wyoming Trucking Assn., Inc., 82 F.3d at 935 (citing Bob Jones University, 416 U.S. at 746); Shapiro, 424 U.S. at 629 (noting that taxpayer seeking injunction must plead and prove facts establishing that his remedy in a refund suit is inadequate to repair any injury that might be caused by an erroneous assessment or collection of taxes).
2. The Declaratory Judgment Act prohibits a court from declaring the rights of litigating parties with regard to federal taxes. Wyoming Trucking Association, Inc., 82 F.3d at 932-933. The Declaratory Judgment Act is remedial only and is not an independent basis for subject matter jurisdiction for this or any other court. See Fry Bros. Corp. v. Department of HUD, 614 F.2d 732, 733 (10th Cir. 1980) (citations omitted). Even if the statute conferred jurisdiction, it expressly excepts tax cases from its operation and does not give the court jurisdiction to render declaratory relief determining federal tax liabilities. See Hutchinson v. United States, 677 F.2d 1322, 1326 (9th Cir. 1982). The court is precluded by 28 U.S.C. § 2201 from entertaining requests for declaratory relief in matters relating to federal taxes. 28 U.S.C. § 2201(a); Wyoming Trucking Association, Inc., 82 F.3d at 932-933; Flora v. United States, 362 U.S. 145, 164 (1960); Fostvedt v. United States, 978 F.2d 1201, 1203 (10th Cir. 1992), cert. denied, 507 U.S. 988 (1993); Voss v. United States, 573 F. Supp. 957, 959 (D. Colo. 1983).
In sum, because the court finds that the Petition challenges the authority of the government to tax, seeks a declaration as to the rights of the litigating parties, and seeks permanent injunctive relief, jurisdiction is barred by both the Anti-Injunction Act and the Declaratory Judgment Act.
D. The United States is a sovereign and, as such, is immune from suit without its prior consent. United States v. Shaw, 309 U.S. 495, 500-01 (1940); Amoco Oil Co. v. United States Environmental Protection Agency, 959 F. Supp. 1318, 1320 (D.Colo. 1997). The United States is not subject to suit absent an express statutory waiver of its sovereign immunity. Atkinson, 867 F.2d at 590 (citing Kentucky v. Graham, 473 U.S. at 165-67); United States v. Mitchell, 463 U.S. 206, 212 (1983). When the United States is a defendant in an action by a taxpayer, the taxpayer has the burden of showing an explicit waiver of sovereign immunity as a prerequisite to federal court jurisdiction. Lonsdale, 919 F.2d at 1444; see also National Commodity and Barter Assn. v. Gibbs, 886 F.2d 1240, 1246 (10th Cir. 1989).
The United States has not waived its sovereign immunity for claims based on alleged constitutional violations by its officers. See Clemente v. United States, 766 F.2d 1358, 1363 (9th Cir. 1985) (United States cannot be held liable for constitutional torts of its officers), cert denied, 474 U.S. 1101 (1986); see also Bivens v. Six Unknown Named Agents, 403 U.S. 388, 410 (1971) (Harlan, J., concurring) ("However desirable a direct remedy against the Government might be as a substitute for individual officer liability, the sovereign still remains immune to suit [for constitutional violations of its officers]"); Dahn v. United States, 127 F.3d 1249, 1254 (10th Cir. 1997) ("The United States and its agencies are not subject to suit under Bivens") (citations omitted).
Brown has not met his burden of showing an explicit waiver of sovereign immunity as a prerequisite to federal court jurisdiction. While Brown broadly allege that he has "adhered to all administrative remedies and requirements as imposed in 26 U.S.C. § 6343, he fails to plead with the specificity required for jurisdiction. Brown does not allege that he paid the tax liability at issue or filed a refund claim with the IRS. See 28 U.S.C. § 1346(a) (providing district courts with jurisdiction over civil actions against the United States for recovery of taxes erroneously or illegally assessed or collected, with certain jurisdictional prerequisites). Brown does not request a refund of overpaid tax for a given tax year. See Id. Brown does not allege nor does the court find any other appropriate basis for a waiver of sovereign immunity. Lacking a waiver of sovereign immunity, the Petition cannot be maintained against the United States.
Section 6343 merely prescribes the circumstances under which the IRS may release a levy on personal property. It does not waive sovereign immunity or provide a cause of action against the United States or its employees.
E. No Waiver of Sovereign Immunity for Common Law Torts
To the extent that Brown's claim for damages may be construed as alleging tortious conduct on the part of the United States or its employees, the FTCA, 28 U.S.C. § 2671 et seq., provides for a limited waiver of sovereign immunity for claims falling within its ambit. However, while the FTCA waives the United States' sovereign immunity in limited actions, claims arising out of the assessment or collection of taxes are excluded from coverage. 28 U.S.C. § 2680(C); Gibbs, 886 F.2d at 1246 and n. 5. The court also notes that it would lack subject matter jurisdiction because Brown has not alleged facts to show that he filed an administrative claim for a refund with the IRS or has otherwise exhausted available administrative remedies. See 26 U.S.C. § 7422; 28 U.S.C. § 1346(a)(1); Bruno v. United States, 547 F.2d 71, 73 (8th Cir. 1976); Lewis v. Sandler, 498 F.2d 395, 399-400 (4th Cir. 1974). To the extent Brown's Petition could be interpreted as making a claim under the FTCA, it must be dismissed.
F. Petition May Be Dismissed as Frivolous
Not only is the Petition jurisdictionally deficient, it is also substantively frivolous. Brown asserts, inter alia, that he is not a resident of the District of Columbia or any United States territory and does not engage in an occupation that generates taxable income. (Declaration pp. 15-17). Such claims have been dismissed as frivolous. See, e.g., Lonsdale, 919 F.2d at 1448 (contentions that plaintiff is not a "person" subject to taxation and that the authority of the United States is confined to the District of Columbia are patently frivolous); United States v. Cheek, 882 F.2d 1263, 1268 n. 2 (7th Cir. 1989) (argument that defendant was not a "fourteenth amendment citizen" and, hence, not subject to federal income tax laws characterized as "absurd"), vacated on other grounds, 498 U.S. 192 (1991); United States v. Ward, 833 F.2d 1538, 1539 (11th Cir. 1987) (finding similar contentions "to be utterly without merit"), cert. denied, 485 U.S. 1022 (1988); United States v. Studley, 783 F.2d 934, 937 (9th Cir. 1986) (assertion that defendant was not a "taxpayer" because she was an "absolute, freeborn and natural individual" held to be "frivolous"); Charczuk v. Commissioner of Internal Revenue, 771 F.2d 471, 473 (10th Cir. 1985) (arguments advanced on behalf of taxpayer were "preposterous"); United States v. Romero, 640 F.2d 1014, 1016 (9th Cir. 1981) (defendant's allegation that he was not a "person," within the meaning of the federal income tax laws found to be "fatuous"); United States v. Bell, 27 F. Supp.2d 1191, 1198 n. 7 and 8 (E.D.Cal. 1998) (finding similar theories "neither correct nor persuasive"). This court concurs with these decisions. Brown's position that he is not subject to federal income tax laws is specious and legally frivolous.
For the reasons set forth, IT IS RECOMMENDED that the United States' Motion to Dismiss (filed September 24, 2001) be GRANTED and that this civil action be DISMISSED with prejudice.
Advisement to the Parties
Within ten days after service of a copy of the Recommendation, any party may serve and file written objections to the magistrate judge's proposed findings and recommendations with the Clerk of the United States District Court for the District of Colorado. 28 U.S.C. § 636(b)(1). Objections to a magistrate judge's recommendation must be made within ten days of service of the Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); In re Griego, 64 F.3d 580, 583 (10th Cir. 1995).
The district judge shall make a de novo determination of those specific portions of the proposed findings or recommendations to which specific objection is made. 28 U.S.C. § 636(b)(1). A general objection that does not put the district court on notice of the basis for the objection will not preserve the objection for de novo review by the district court. See In re Griego, 64 F.3d at 583, United States v. One Parcel of Real Property Known As 2121 East 30th Street, Tulsa, Oklahoma, 73 F.3d 1057, 1060 (10th Cir.), cert. denied, 519 U.S. 909 (1996). The district judge may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. 28 U.S.C. § 636(b)(1). The district judge may also receive further evidence or recommit the matter to the magistrate judge with instructions. 28 U.S.C. § 636(b)(1).
"[A] party's objections to the magistrate judge's report and recommendation must be both timely and specific to preserve an issue for de novo review by the district court or for appellate review." One Parcel of Real Property Known As 2121 East 30th Street, 73 F.3d at 1060. Failure to make timely objections to the magistrate judge's proposed findings and recommendations will bar de novo review by the district judge of the magistrate judge's proposed findings and recommendations and will result in a waiver of the right to appeal from a judgment of the district court based on the proposed findings and recommendations of the magistrate judge. In re Key Energy Resources, Inc., 230 F.3d 1197, 1199-1201 (10th Cir. 2000); Theede v. United States Department of Labor, 172 F.3d 1262, 1267-68 (10th Cir. 1999); One Parcel of Real Property Known As 2121 East 30th Street, 73 F.3d at 1059-60.