Opinion
Civil Action No. 02-0983 (JDB).
June 18, 2003.
MEMORANDUM OPINION AND ORDER
Plaintiff Jimmy C. Chisum ("plaintiff") brings this action for damages against Renato Beghe ("`defendant"), a Judge of the United States Tax Court, alleging violations of the Constitution and the Federal Racketeering and the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq. Defendant moves to dismiss the action on the grounds that he has absolute immunity from suit and that plaintiff's amended complaint fails to state a cause of action. For the reasons stated below, defendant's motion is GRANTED.
Plaintiff has filed several similar actions against other judges of the Tax Court. Two of these actions have been dismissed previously, see Memorandum Opinions filed in Chisum v. Colvin, Civ. A. No. 02-0318 (D.C. March 21, 2003) andChisum v. Vasquez, Civ. A. No. 02-0799 (D.C. March 21, 2003), and a third is being dismissed on this date, see Chisum v. Ruwe, Civ. A. No. 02-1013 (D.D.C.).
BACKGROUND
Plaintiff, a business and estate planner, alleges that in November 1998 the Commissioner of the Internal Revenue Service determined a deficiency against Kevin R. Johnston ("Johnston"), who was apparently one of plaintiff's "customers." First Am. Compl. ¶¶ 3, 5, 19, 30. The Commissioner concluded that Johnston had a business relationship with Universal Trust, that Universal Trust was a sham, and that income received by Universal Trust was attributable to Johnston. Id. ¶¶ 5-6. In the alternative, the Commissioner determined that Universal Trust was a grantor trust, that Johnston was the grantor, and that income received by Universal Trust was attributable to Johnston. Id. ¶ 7.
Johnston filed a timely petition with the United States Tax Court challenging the Commissioner's determination. Id. ¶ 10. The petition was heard by defendant, who entered a decision in the Commissioner's favor. Id. ¶ 16; see also Johnston v. Commissioner of Internal Revenue, 80 T.C.M. (CCH) 447, 2000 WL 1478477 (T.C.M. Oct. 6, 2000). Plaintiff, whose precise relationship to the Universal Trust is not clearly set forth in the amended complaint, now alleges that defendant lacked jurisdiction to adjudicate Johnston's petition. Id. ¶¶ 10-16. As a result, plaintiff contends that he "has been forced to expend substantial time and effort to protect the interests and assets of the Trusts that would not have been necessary but for the Defendant's failure to dismiss Mr. Johnston's case." Id. ¶ 17.
Plaintiff also alleges that defendant and "other unnamed and unknown confederates and conspirators have used the Deficiency process, not for determining whether the correct amount of tax is paid by the party owing the tax, but for the expressed purpose of `putting the Plaintiff out of business.'" Id. ¶ 19. According to plaintiff, the overt acts in furtherance of the conspiracy included the issuance of Notices of Deficiency declaring invalid the trusts used by plaintiff in his business and estate plans, the issuance of Final Partnership Administrative Adjustments to various Limited Liability Companies used by plaintiff disallowing deductions and credits claimed by those entities, and the agreement among judges on the Tax Court to dismiss any petitions filed by plaintiff. Id. ¶¶ 20, 23.
ANALYSIS
I. Absolute Immunity
It is well-established that judges enjoy immunity from liability for damages for acts committed within their judicial jurisdiction. Mireles v. Waco, 502 U.S. 9, 9 (1991) (per curiam); Pierson v. Ray, 386 U.S. 547, 553-554 (1967). This immunity is not overcome by allegations of bad faith or malice.See Mireles, 502 U.S. at 12. Rather, the immunity is overcome in only two sets of circumstances: "First, a judge is not immune from liability for nonjudicial actions, i.e., actions not taken in the judge's judicial capacity. Second, a judge is not immune for actions, though judicial in nature, taken in the complete absence of all jurisdiction." Id. at 11-12 (internal citations omitted).
For the most part, the allegations set forth by plaintiff plainly do not fall within either of the two exceptions to immunity. Plaintiff's amended complaint centers around the allegation that defendant sustained the Commissioner's determination of a deficiency. This was undoubtedly a "judicial" act, and therefore not within the first exception to immunity.See id. at 12 ("`[W]hether an act by a judge is a `judicial' one relate[s] to the nature of the act itself, i.e., whether it is a function normally performed by a judge, and to the expectations of the parties, i.e., whether they dealt with the judge in his judicial capacity.'" (quoting Stump v. Sparkman, 435 U.S. 349, 362 (1978)).
With respect to the second exception, plaintiff asserts that the "property rights and any contractual rights between the Plaintiff, the Trust, and Mr. Johnston were private rights beyond the jurisdiction and authority of the Defendant and the Commissioner to determine." First Am. Compl. ¶ 11. Plaintiff's theory, as elaborated in his opposition to the motion to dismiss, is that defendant, in reaching his conclusions as to certain tax issues, made findings concerning the ownership of income nominally earned by the Trust — findings that plaintiff contends implicated questions of state property and contract law that the Tax Court lacks jurisdiction to decide. See Response to Mot. Dismiss at 3-6.
In assessing plaintiff's allegation, the Court must be mindful that "the scope of the judge's jurisdiction must be construed broadly where the issue is the immunity of the judge. A judge will not be deprived of immunity because the action he took was in error, was done maliciously, or was in excess of his authority; rather, he will be subject to liability only when he has acted in the `clear absence of all jurisdiction.'" Stump, 435 U.S. at 356-57 (internal quotation marks and citation omitted).
Here, Johnston himself petitioned the Tax Court for relief from the Commissioner's determination. Plaintiff can hardly contest that the Tax Court generally has jurisdiction to review such a petition. See 26 U.S.C. § 6213, 6214. Moreover, plaintiff's argument that the Tax Court lacks jurisdiction to decide questions of state property and contract law misses the mark. Federal law determines whether and to what extent legal interests and rights in property will be federally taxed, see United States v. Irvine, 511 U.S. 224, 238 (1994), and it is well-established that substance controls over form for federal income tax purposes, Commissioner of Internal Revenue v. Court Holding Co., 324 U.S. 331, 334 (1945). In adjudicating theJohnston petition, defendant did not decide issues of state law, but rather analyzed the economic substance of the transactions surrounding the Universal Trust in order to determine their federal tax consequences, see generally Johnston, 2000 WL 1478477, at Part III — something he was undoubtedly empowered to do. Accordingly, there is no ground upon which this Court can conclude that defendant acted in the "clear absence of all jurisdiction." See Stump, 435 U.S. at 357. Defendant is therefore immune from suit on plaintiff's claims to the extent that those claims are based upon defendant's decision concerning the Commissioner's deficiency determination.
II. RICO Claim
Although the heart of plaintiff's amended complaint is the allegation that defendant improperly upheld the Commissioner's deficiency determination, plaintiff also alleges certain actions by defendant that arguably are not judicial and thus may be outside the scope of immunity. See Mireles, 502 U.S. at 11-12. In particular, plaintiff alleges that defendant violated RICO by conspiring with other unnamed and unknown persons, including other Tax Court judges, agents and officers of the IRS, the Department of Justice, and the District Counsel's Offices, to drive him out of business. First Am. Compl. ¶¶ 18-19, 26-31. According to plaintiff, the conspirators issued Notices of Deficiency that declared invalid the trusts used by plaintiff in his estate planning business and issued Final Partnership Administrative Adjustments to various Limited Liability Companies used by plaintiff disallowing deductions and credits claimed by those entities. Id. ¶¶ 20, 23, 28. In addition, plaintiff contends, the conspirators agreed that the judges on the Tax Court would dismiss any petitions filed by plaintiff on behalf of the trusts or LLC's. Id. ¶ 23. Plaintiff cites the Notice of Deficiency issued to Johnston and subsequently upheld by defendant in court as a specific example of the alleged conspiracy in action. Id. ¶¶ 28-30.
Plaintiff's claim under the Constitution appears to fail on the basis of immunity alone because that claim seems to concern the alleged actions by defendant in adjudicating Johnston's petition. To the extent that plaintiff is asserting a constitutional claim based on any non-judicial acts alleged in the amended complaint, that claim fails because the Court is unable to discern from the amended complaint or from plaintiff's brief how such conduct provides plaintiff with a viable basis for relief under the Constitution.
Plaintiff's allegations are insufficient to avoid dismissal. To sustain his RICO claim, plaintiff must allege at a minimum that defendant has engaged in a "pattern of racketeering activity or collection of unlawful debt." See 18. U.S.C. § 1962. But the amended complaint largely alleges conduct that on its face appears entirely lawful; the fact that government officials have been investigating tax deficiencies and that judges on the Tax Court have ruled in the government's favor on deficiency issues does not give rise to any inference of impropriety much less evidence a conspiracy involving a pattern of racketeering activity. Although plaintiff asserts that he is "credibly informed" that defendant is part of a conspiracy with a nefarious purpose, First Am. Compl. ¶ 18, plaintiff identifies neither the source of his information nor the basis for his belief that the information is credible.
Ultimately, there is nothing in plaintiff's amended complaint — other than plaintiff's bald assertion — that ties defendant's action in the Johnston case to the existence of some alleged conspiracy involving a variety of government officials and judges. The Court will not allow plaintiff to proceed with a RICO claim against a federal judge without something more than conclusory allegations of participation in, or conspiracy with respect to, actionable racketeering activity.
ORDER
For the foregoing reasons, it is hereby ORDERED that Defendant's Motion to Dismiss Amended Complaint is GRANTED. This action is DISMISSED in its entirety.