Opinion
CASE NO. 8:02-CV-2006-T-17MAP
April 4, 2003
ORDER ON DEFENDANT UNITED STATES' MOTION TO DISMISS
This cause comes before the Court on Defendant, United States', Motion to Dismiss Plaintiff's Complaint (Docket No. 3) and Memorandum of Law in support thereof (Docket No. 4); and Plaintiff, Delmore D. Holmstrom's, Memorandum in Opposition to Motion to Dismiss (Docket No. 8).
BACKGROUND
The following facts are taken from the Plaintiff's Complaint and assumed to be true for purposes of resolving the pending motion. Plaintiff, Delmore Holmstrom (Plaintiff), filed suit against the United States (Defendant), the Internal Revenue Service (IRS), and Revenue Agent, Robert Sullivan (Revenue Agent) seeking to quash three third-party summonses. The Revenue Agent issued the third-party summonses to the Bank of America, located in Fort Lauderdale, Florida, requesting financial records pertaining to transactions made during the years included in Plaintiff's 1997, 1998, and 2002 tax returns. One summons was issued on October 16, 2002, and the other two were issued on October 17, 2002. (Docket No. 1, Ex. A1B, A1C, and A1A).
Plaintiff alleges that the books and records held by the Bank of America are personal and confidential and that compelling the Bank of America to "produce records under these summonses" would "subvert [his] Fifth Amendment rights, substantive due process rights, and privacy protections." Furthermore, Plaintiff alleges that the summonses are "overbroad in nature and lack necessary specificity as to what particular excise tax activity" he is involved in and that they "constitute a fishing expedition." Additionally, Plaintiff alleges that he was not involved in any taxable excise activity.
On November 5, 2002, Plaintiff served process upon the United States by mailing a copy of the summons and complaint to the United States Attorney for the Middle District of Florida, to the United States Attorney General, and to the Revenue Agent via certified mail.
STANDARD OF REVIEW
I. Motion to Dismiss
This Court must read Plaintiff's pro se allegations in a liberal fashion. Haines v. Kerner, 404 U.S. 519 (1972). Plaintiff's complaint should not be dismissed for failure to state a claim unless is appears beyond a reasonable doubt that Plaintiff can prove no set of facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). In considering a motion to dismiss, the court must take all material allegations of the complaint as true and liberally construe those allegations in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). However, a plaintiff may not merely "label" claims to survive a motion to dismiss. Blumel v. Mylander, 919 F. Supp. 423, 425 (M.D. Fla. 1996). When, on the basis of a dispositive issue of law, no construction of the factual allegation will support the cause of action, dismissal of the complaint is appropriate.Executive 100, Inc. v. Martin County, 922 F.2d 1536 (11th Cir. 1991).
DISCUSSION
Defendant moves to dismiss Plaintiff's Motion to Quash Third Party Summons on three grounds. First, Defendant asserts that Plaintiff's Service of Process on the United States was insufficient pursuant to Federal Rule of Civil Procedure 12(b)(5); therefore, this Court lacks personal jurisdiction over the United States pursuant to Federal Rule of Civil Procedure 12(b)(2). Second, Defendant asserts that the IRS and the Revenue Agent are not proper parties to this civil action. Third, Defendant asserts that Plaintiff failed to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).
I. Motion to Dismiss for Insufficient Process
Defendant asserts that Plaintiff failed to properly serve the United States attorney because Plaintiff's process was not addressed to the civil process clerk. Plaintiff asserts that service was properly made because the word "or" in Federal Rule of Civil Procedure 4(i)(1) indicates a choice between delivery, by certified mail, to the United States attorney or the civil process clerk.
The procedure for service of process upon the United States is set forth in Federal Rule of Civil Procedure 4(i), as follows:
(1) Service upon the United States shall be effected (A) by delivering a copy of the summons and of the complaint to the United States attorney for the district in which the action is brought or to an assistant United States attorney . . . or by sending a copy of the summons and of the complaint by registered or certified mail addressed to the civil process clerk at the office of the United States attorney and (B) by also sending a copy of the summons and of the complaint by registered or certified mail to the Attorney General of the United States at Washington, District of Columbia. (2) Service upon an officer, agency, or corporation of the United States, shall be effected by serving the United States in the manner prescribed by paragraph (1) of this subdivision and by also sending a copy of the summons and of the complaint by registered or certified mail to the officer, agency, or corporation. Fed R. Civ. P. 4(i) (emphasis added).
Plaintiff served the United States Attorney General correctly because Plaintiff sent a copy of the summons and of the complaint, by certified mail, to the Attorney General as required by Federal Rule of Civil Procedure 4(i)(B). However, Plaintiff failed to properly serve the United States attorney because his process was not addressed to the civil process clerk, but was instead addressed to the United States attorney for the Middle District of Florida, Paul Ignatius Perez. The word "or" in Rule 4(i)(1) allows a choice between "delivering a copy of the summons and of the complaint to the United States attorney" and "sending a copy of the summons and of the complaint by registered or certified mail addressed to the civil process clerk." Because Plaintiff chose to serve process by certified mail, rather than delivery, he should have sent the summons and complaint to the civil process clerk. Therefore, the service of process was insufficient under Federal Rule of Civil Procedure 12(b)(5).
"Failure to properly serve the United States deprives the court of personal jurisdiction." Thompson v. Internal Revenue Service, 23 F. Supp.2d 923, 924 (N.D. Ind. 1998) (citing Rabiolo v. Weinstein, 357 F.2d 167, 168 (7th Cir. 1966). "A jurisdictional defect of this sort is fatal to maintenance of an action." Id. (citing Bland v. Britt, 271 F.2d 193 (4th Cir. 1959)). When service is improper, courts routinely dismiss these actions. Id. Therefore, due to the insufficiency of the service of process, this Court lacks personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2).
The Court having considered all the arguments of the parties is convinced that Plaintiff has failed to effect service upon the United States in accordance with Federal Rule of Civil Procedure 4(i). Therefore, Defendant's Motion to Dismiss is granted pursuant to Federal Rule of Civil Procedure 12(b)(5) and 12(b)(2).
II. Motion to Dismiss for Lack of Personal Jurisdiction over the IRS and the Revenue Agent
Defendant asserts that Plaintiff has improperly named the IRS and the Revenue Agent as parties. Defendant asserts that suit against the IRS is improper because a United States executive department or one of its agencies can only be sued with Congress' express authorization. Defendant asserts that suit against the Revenue Agent is improper because a suit against an IRS employee working in his official capacity is a suit against the United States.
"An executive department of the United States or one of its agencies may only be sued in its own name if the authority to be sued has been expressly conferred by Congress." Deleeuw v. IRS, 681 F. Supp. 402, 403-404 (E.D. Mich. 1987) (citing Blackmar v. Guerre, 342 U.S. 512, 514-515 (1952)). Congress has not authorized the Treasury Department or any of its divisions to be sued. Castleberry v. ATF, 530 F.2d 672, 673, n. 3 (5th Cir. 1976); Deleeuw, 681 F. Supp. at 404. The IRS is a division of the Treasury Department; therefore, the IRS cannot be sued.
A suit against an IRS employee in his or her official capacity is a suit against the United States. Militello v. Bardell, 970 F. Supp. 1022, 1024 (M.D. Fla. 1997); Rosado v. Curtis, 885 F. Supp. 1538, 1542 (M.D. Fla. 1995), aff'd 84 F.3d 437 (11th Cir. 1996). The Revenue Agent is an IRS employee who was working in his official capacity; therefore, this is a suit against the United States.
The Court having considered all of the parties' arguments is convinced that Plaintiff cannot sue the IRS or the Revenue Agent. Therefore, the Court grants Defendant's Motion to Dismiss the IRS and Revenue Agent as defendants in this action.
III. Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted
I.R.C. § 7602(a)(2) provides the IRS with summons power, which enables the IRS to compel a taxpayer or a third party to produce records. IRS examination personnel, including revenue agents, are authorized to issue third party summonses. I.R.S. Delegation Order No. 4, 55 Fed. Reg. 7626. "When the summons requires the production of . . . records . . . it shall be sufficient if such . . . records . . . are described with reasonable certainty." I.R.C. § 7603(a). In other words, the summoned party must know what is required of it with "sufficient specificity to permit [it] to respond adequately to the summons." United States v. Medlin, 986 F.2d 463 (11th Cir. 1993). The Bank of America summonses detailed the Plaintiff's bank account number, the bank account number of the Plaintiff's business, and the specific dates of the records needed. In conclusion, the Revenue Agent had authority to issue the summonses to Bank of America, and the Revenue Agent described his request with "sufficient specificity."
The proper administrative steps for notice to the taxpayer of a Third Party summons are set forth in I.R.C. § 7609(a)(1) as follows:
If any summons to which this section applies requires . . . the production of any portion of records made or kept on or relating to . . . any person (other than the person summoned) who is identified in the summons, then notice of the summons shall be given to any person so identified within 3 days of the day on which such service is made, but no later than the 23rd day before the day fixed in the summons as the day upon which such records are to be examined. Such notice shall be accompanied by a copy of the summons which has been served and shall contain an explanation of the right under subsection (b)(2) to bring a proceeding to quash the summons.
The Revenue Agent followed these administrative steps. First, he sent the three summonses to Bank of America requesting the production of records (all monthly statements and deposits from January 1, 1996 through December 31, 1997; and January 1, 2001 through December 31, 2001) made and kept on Plaintiff and on Plaintiff's business (Cornerstone Enterprises Trust). Second, the Revenue Agent identified Plaintiff in each summons. Third, the Revenue Agent sent notice, on October 17, 2002, to Plaintiff of the summons issued to the Bank of America on October 16, 2002. (Docket No. 1, Ex. A1B) The Revenue Agent sent notice, on October 17, 2002, to Plaintiff of the two summonses issued to the Bank of America on October 17, 2002. (Docket No. 1, Ex. A1C, A1A). Therefore, the Revenue Agent gave notice to Plaintiff within 3 days of the day on which the summonses were served on the Bank of America, and the notice to Plaintiff was sent more than 23 days before the day fixed in the summonses (November 16, 2002) as the day upon which the records were to be examined. Finally, Plaintiff was given a copy of the summonses and an explanation of his right under I.R.C. § 7609(b)(2) to bring a proceeding to quash the summonses. (Docket No. 1, Ex. A1B, A1C, A1A).
To have a summons enforced by a court, the IRS must show: (1) that the investigation is for a legitimate purpose; (2) that the requested material is relevant to the investigation; (3) that the material is not already in the agency's possession; and (4) "that the proper administrative steps have been followed." United States v. Norwest Corporation, 116 F.3d 1227 (8th Cir. 1997) (citing United States v. Powell, 379 U.S. 48, 57-58 (1964)).
First, Plaintiff fails to allege how the investigation is not for a "legitimate purpose." Second, "relevance," under the Powell test, does not depend "on whether the information sought would be relevant in an evidentiary sense, but merely whether that information might shed some light on the tax return." Id. (citing United States v. Arthur Young Co., 465 U.S. 805, 813-814 (1984)). Plaintiff fails to allege how the requested bank records will not "shed some light on the tax return." Third, Plaintiff fails to allege that the material is already in the possession of the IRS. Finally, from Plaintiff's own exhibits it is clear that the Revenue Agent and the IRS followed the proper administrative steps. In conclusion, Plaintiff has failed to allege any legitimate basis upon which the third-party summonses should be quashed.
When, on the basis of a dispositive issue of law, no construction of the factual allegation will support the cause of action, dismissal of the complaint is appropriate. Executive 100, Inc., 922 F.2d 1536. The Court having considered all the arguments of the parties is convinced that Plaintiff has failed to state a claim upon which relief can be granted. Therefore, Defendant's Motion to Dismiss is granted pursuant to Federal Rule of Civil Procedure 12(6). Accordingly, it is.
ORDERED that Defendant United States' Motion to Dismiss (Docket No. 3) Plaintiff's Complaint to Quash Third Party Summons (Docket No. 1) be GRANTED and the Clerk of Court shall enter judgment for the defendant.