Opinion
Case No. CIV-00-037-T-JMR
February 8, 2001
Donald D. Bailey, pro se.
Charles M. Duffy, U.S. Dept of Justice, Tax Division, for Defendant.
JUDGMENT IN A CIVIL CASE
X DECISION BY COURT. This action came under consideration before the Court. The issues have been considered and a decision has been rendered.
IT IS ORDERED AND ADJUDGED that Defendant's Motion to Dismiss is GRANTED.
Judgment is entered in favor of the defendant and against the plaintiff.
ORDER
On January 18, 2000, Plaintiff filed the instant complaint against the United States of America, Philip Ward, Carey Reeves, Rick Holster (Hosler), Andrew Horning. David Valadez, John Doe 1 thru 10, and Jane Doe 1 thru 10 in their official capacities as employees of the Internal Revenue Service(IRS). Plaintiff asserts that Defendants committed a wrongful act under 28 U.S.C. § 1346 (b). Plaintiff alleges that as a result of Defendants wrongful and fraudulent conduct, he has suffered personal and professional financial damages and seeks recovery from the United States in the amount of fifteen million dollars. In response, Defendants filed a motion to dismiss this matter asserting the doctrine of res judicata. For the reasons stated below, Defendants' motion is granted.
In pertinent part, 28 U.S.C. 1346(b) grants district courts exclusive jurisdiction of civil actions on claims against the United States, accruing on and after January 1, 1945, for injury or loss of property caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.
Plaintiff also moves for dismissal of this matter pursuant to Federal Rule of Civil Procedure 12(b)(1). Rule 12(b)(1) concerns are not addressed at this time because of the dispositive nature of Plaintiff's res judicata defense. However, the Court notes that Plaintiff's Rule 12(b)(1) concerns appear to have merit. In addition, the Court notes that Plaintiff's complaint is susceptible to a Rule 12 (b)(6) motion as it is vague and skeletal at best.
BACKGROUND
Plaintiff is an accountant and claims that in the later part of 1994 or in the early part of 1995, Defendants, while acting within the scope of their office or employment, altered and manufactured three tax returns and restamped the tax returns to reflect different filing dates. Plaintiff asserts that at the request of an IRS employee, the taxpayer then signed and back dated the tax returns and forged the co-taxpayer's signature.
Plaintiff asserts that "[t]hese altered and manufactured tax returns were subsequently used to perpetrate fraud" on him. Plaintiff asserts that in 1996 "an employee of the Internal Revenue Service in Tucson, Arizona, assessed IRS Code 6694(a) and (b) Penalties [sic] for the years 1991, 1992, and 1994" against him in a wrongful and fraudulent manner. Plaintiff claims that the IRS employee changed the dates on the tax returns in order to assess the tax preparer penalty upon him for 1991 and 1992 because the statute of limitations had expired for such a penalty. In addition, Plaintiff argues that the tax preparer penalty for 1994 was wrongfully and fraudulently assessed because the IRS employee who assessed the penalty knew that the penalty was unwarranted.
Plaintiff has filed other suits related to this matter. For instance, in Bailey v. United States, 927 F. Supp. 1274 (D. Ariz. 1996), aff'd, 117 F.3d 1424 (9th Cir. 1997) (Bailey I), Plaintiff brought suit against the IRS and the United States seeking a return of civil penalties that he alleged were unlawfully assessed pursuant to 26 U.S.C. § 6701. The Court, however, granted summary judgment for the defendants concluding that Plaintiff failed to adequately challenge the defendants' evidence. The tax preparer penalty was upheld.
The Court did, however, reduce the penalty amount because the initial penalty was mistakenly imposed under § 6702(b)(2) rather than § 6701(b)(1).
In March of 1998, Plaintiff filed another suit pursuant to Rule 60(b) of the Federal Rules of Civil Procedure against the United States and the IRS alleging that the IRS fraudulently altered the tax returns at issue in Daily I. Bailey v. IRS and the United States of America, 188 F.R.D. 346, 349 (D. Ariz. 1999), aff'd, 232 F.3d 893 (9th Cir. 2000) (Bailey II). Plaintiff alleged that the IRS presented an altered and forged copy on the taxpayers' 1987 tax return in Bailey I. Plaintiff argued that the signatures on the tax returns were not made by the taxpayers and that the dates next to the signatures were changed by unknown persons at the IRS. The Court, however, dismissed the case on res judicata grounds stating that Plaintiff should have raised the tax return issue in Bailey I as he was aware of the tax returns at that time and had had an opportunity to examine them. The Court concluded that Plaintiff failed to use reasonable diligence during the discovery process and noted that "`[t]he law of res judicata now reflects the expectation that parties who are given the capacity to present their `entire controversies' shall in fact do so." Bailey, 188 F.R.D. at 352 (citing Restatement (Second) of Judgments (1980), § 24 at comment c.)
DISCUSSION
Plaintiff's present suit must be dismissed on res judicata grounds because the suit, although alleging a different theory of recovery and alleging new evidence, is, in essence, the same as Bailey II. The doctrine of res judicata bars all grounds for recovery in a matter that could have been asserted, whether they were or not, in a prior suit between the same parties regarding the same cause of action. Ross v. IBEW, 634 F.2d 453, 457 (9th Cir. 1990). In determining whether successive lawsuits involve a single cause of action for purposes of res judicata, a court should inquire as to (1) whether the rights or interests established in prior judgment would be destroyed or impaired by prosecution in the second action; (2) whether substantially same evidence is presented in the two actions; (3) whether the two suits involve the alleged infringement of the same rights; and (4) whether the two suits arise out of the same transactional nucleus of fact. Nordhorn v. Ladish Co., Inc., 9 F.3d 1402, 1404 (9th Cir. 1993); A.V. Costantini v. Trans World Airlines, 681 F.2d 1199, 1201 (9th Cir. 1982). Summary judgment is a judgment on the merits and is therefore entitled to res judicata effect in subsequent litigation.
The Court dismisses the named Defendants and the John/Jane Does in this matter because a suit against IRS employees in their official capacity is essentially a suit against the United States. Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985). As such, absent express consent to sue, the individually named Defendants must be dismissed. Id. In this case, the Court acknowledges that Plaintiff did not specifically state that he was suing the named Defendants in their official capacity, but Plaintiff's lawsuit is based on 28 U.S.C. S 1346(b), which relates to suits against the United States. Plaintiff asserts no theories of recovery against the named Defendants in their individual capacity. Moreover, Plaintiff has not requested damages from any of the individually named Defendants and has not objected to Defendants' assumption that the suit is based on official capacity. Therefore, the United States is the only real party in interest in this matter.
In this case, the present claim is identical to the one previously dismissed on res judicata grounds in Bailey II. The only distinction is that Plaintiff now seeks relief under 28 U.S.C. § 1346 (b) and asserts new evidence. In regards to his new theory of liability, Plaintiff is attempting, as in his Bailey II claim, to reinstate his cause of action, against the same defendants, based on the same facts, by using a new legal theory. Bailey, 188 F.R.D. at 353. Plaintiff is reminded that a plaintiff cannot revive previously litigated causes of action by changing his legal theory. See Johnson v. Dept. of Water and Power of the City of Los Angeles, 405 F.2d 294, 295 (9th Cir. 1971).
Plaintiff also asserts that he has new evidence in this matter in that he has recently discovered who signed the allegedly altered tax returns. Plaintiff allegedly learned the person's identity in November 1999, after hiring a handwriting expert. However, Plaintiff's newly discovered information does not relieve him from res judicata repercussions. As the Court noted in Bailey II, Plaintiff should have made such discovery attempts during his first suit. Similarly, in A.V. Costantini, the Ninth Circuit concluded that a Plaintiff who claimed to "unearth an additional falsehood" to prove his case was barred by res judicata because he should have uncovered the evidence in discovery. A.V. Costantini, 681 F.2d at 1203.
In this case, if Plaintiff had preformed reasonable discovery, then he would have uncovered the alleged evidence that he now presents as "new." Plaintiff's lawsuit involves the exact same transactional nucleus of facts, involves the same parties, involves infringement of the same rights, and involves substantially the same evidence as previously presented. Allowing this action to continue would impair Defendants' right to final adjudication on this matter.
Accordingly,
IT IS ORDERED that Defendants' Motion to Dismiss is GRANTED. In addition, Plaintiff is cautioned that, although the Court customarily allows pro se plaintiffs considerable latitude in their pleadings, Rule 11 sanctions under the Federal Rules of Civil Procedure may be assessed for any future frivolous litigation.