Opinion
Civil Action 00-0040-P-M
February 21, 2001
REPORT AND RECOMMENDATION
The Motion to Dismiss filed by Defendants (Doc. 15) has been referred for report and recommendation, under 28 U.S.C. § 636 (b)(1)(B) and Local Rule 72.2. Jurisdiction has been invoked in this Court under 28 U.S.C. § 1331. It is recommended that the Motion to Dismiss be granted and that judgment be entered in favor of Defendants and against Plaintiffs on all claims.
The facts of this action are, briefly, as follows. Plaintiffs William T. and Deborah S. Praytor, husband and wife, were audited by the Internal Revenue Service (hereinafter IRS) for tax years 1994, 1995, and 1996. During the course of the audit process, Plaintiffs had contact with Defendants S. Diane Manning, Lillie J. Madison, Diane Henderson, Bill Thompson, and Richard F. Moran, all current or former IRS agents. The Praytors were ultimately assessed an income tax deficiency for each of the three years, a decision upheld by the U.S. Tax Court (Doc. 15 Exhibit).
Plaintiffs brought this action on January 14, 2000 (Doc. 1). Essentially, the Praytors assert that the IRS did not consider their tax claims in a professional, open-minded manner; rather, the agents treated them shabbily because of the husband's occupation as a gambler and the deductions sought in connection with that profession. Plaintiffs raise claims of conspiring to injure, attempting to extort taxes, willful false computation of taxes, use of the postal service for false pretenses, impeding the proper administration of the IRS laws, racketeering in interstate commerce, fraudulent preparation of documents, slander/libel, and deprivation of due process (Doc. 1). The Praytors seek compensatory and punitive damages.
Plaintiffs have not designated specific claims against particular Defendants except that the slander/libel claim has been brought only against Defendants S. Diane Manning and Lillie J. Madison (Doc. 1, ¶ 51).
The United States of America has certified that the individually-named Defendants "were acting within the scope of their employment as employees of the United States at the time of the incidents out of which [P]laintiffs' claims arose" and has substituted itself, the United States of America, as a Defendant in this action for all named Defendants who have been dismissed from this action with regard to the claim for slander/libel (Doc. 14).
Defendants have filed a Motion to Dismiss this action on a number of grounds (Doc. 15). Plaintiffs have responded to the Motion (Doc. 19). The Court will specifically address Defendants' assertions that this action should be dismissed under Fed.R.Civ.P. 12(b)(1), (2), and (5).
"Every defense, in law or fact, to a claim for relief in any pleading, whether a claim, counterclaim, cross-claim, or third-party claim, shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion: (1) lack of jurisdiction over the subject matter, (2) lack of jurisdiction over the person, . . . [and] (5) insufficiency of service of process."
Defendants assert that this Court lacks subject matter jurisdiction of this action under Fed.R.Civ.P. 12(b)(1) (Doc. 15, pp. 6-8). The Undersigned notes that fellow Magistrate Judge Cassady, in Hatley v. Department of Treasury, Internal Revenue Service, 876 F. Supp. 1262, 1267 (S.D. Ala. 1995), discussed this defense; his report and recommendation was accepted as the opinion of the Court, with minor modification, by District Court Judge Pittman. That discussion, both thorough and exhaustive, will be set out herein in full.
To the extent that the plaintiff seeks common law damages against the federal official defendants in their official capacities, these claims are in fact actions against the United States, and are barred by sovereign immunity. "The general rule is that a suit is against the sovereign if the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration, or if the effect of the judgment would be to restrain the Government from acting, or to compel it to act." Dugan v. Rank, 372 U.S. 609, 620, 83 S.Ct. 999, 1006, 10 L.Ed.2d 15 (1963) (citations and quotations omitted). See also Stafford v. Briggs, 444 U.S. 527, 542 n. 10, 100 S.Ct. 774, 784 n. 10, 63 L.Ed.2d 1 (1980) ("In deciding whether an action is in reality one against the Government, the identity of the named parties defendant is not controlling; the dispositive inquiry is 'who will pay the judgment?'") (citing Larson v. Domestic Foreign Commerce Corp., 337 U.S. 682, 704, 69 S.Ct. 1457, 1468, 93 L.Ed. 1628 (1949))). Because a judgment on the plaintiff's claims against the federal official defendants in their official capacities would be paid by the government, these claims are in reality claims against the United States.
The United States is immune from suit unless it has consented to be sued. See U.S. v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 770, 85 L.Ed. 1058 (1941). Sovereign immunity bars claims against the United States for money damages for constitutional violations. See Keene Corp. v. U.S., 700 F.2d 836, 838 n. 3, 845 n. 13 (2d Cir.) cert. denied, Keene Corp. v. United States, 464 U.S. 864, 104 S.Ct. 195, 78 L.Ed.2d 171 (1983). A claim for money damages for constitutional violations will lie only against a federal official in his or her individual capacity, as a Bivens action. See FDIC v. Meyer, [510] U.S. [471], 114 S.Ct. 996, 127 L.Ed.2d 308 (1994) (Bivens action not allowed against federal agency). See also Mack v. United States, 814 F.2d 120, 123 (2d Cir. 1987) ("Bivens actions against the United States are routinely dismissed"). Therefore, all claims by the plaintiff for money damages for constitutional violations against . . . the federal employee defendants in their official capacities are barred by sovereign immunity and are due to be dismissed.
To the extent that the plaintiff's claims are common law claims for damages against federal employees in their official capacities, these claims are due to be dismissed for lack of subject matter jurisdiction. As discussed above, these claims are in fact claims against the United States. The United States has waived sovereign immunity with respect to tort claims under the Federal Tort Claims Act ("FTCA") 28 U.S.C. § 2674. See U.S. v. Smith, 499 U.S. 160, 111 S.Ct. 1180, 113 L.Ed.2d 134 (1991). However, a prerequisite to bringing a tort claim against the United States is that a claim be filed with the appropriate agency, and failure to file an administrative claim deprives the court of subject matter jurisdiction over the cause of action. See 28 U.S.C. § 1346, 2671, 2675. The plaintiff has not alleged that such an administrative claim has been filed with any appropriate agency, and therefore this court does not have jurisdiction to consider the plaintiff's claims for common law torts against . . . any of the federal official defendant[s] in their official capacities. Thus, these claims are due to be dismissed for lack of subject matter jurisdiction.Hatley, 876 F. Supp. at 1267-68. The Court also notes that "[s]uits for damages stemming from activities undertaken to collect taxes are exempted from the FTCA general waiver of immunity under 28 U.S.C. § 2680 (c)." Hatley, 876 F. Supp. at 1268 n. 1 (citing Capozzoli v. Tracey, 663 F.2d 654, 657 (5th Cir. 1981)
The Court finds that Hatley addresses the claims raised in this action. Specifically, Hatley is applicable in this action in the following ways. The Praytors claim slander/libel in count eight of the complaint (Doc. 1, ¶¶ 50-51); common law damage claims against federal officials in their official capacities are, in fact, claims against the United States and barred by sovereign immunity. See Hatley, 876 F. Supp. at 1267. Plaintiffs claim deprivation of due process under the Fifth Amendment in count nine of the complaint (Doc. 1, ¶¶ 52-53); monetary claims against the United States for constitutional violations are barred by sovereign immunity. See Hatley, 876 F. Supp. at 1267. Finally, the Praytors bring claims of conspiring to injure, attempting to extort taxes, willful false computation of taxes, use of the postal service for false pretenses, impeding the proper administration of the IRS laws, racketeering in interstate commerce, and fraudulent preparation of documents in counts one through seven of the complaint (Doc. 1, ¶¶ 36-49); the United States has not waived sovereign immunity for claims brought against it in connection with the collection of taxes. Hatley, 876 F. Supp. at 1268 n. 1.
It is found that this Court lacks subject matter jurisdiction over the claims in this action under Fed.R.Civ.P. 12(b)(1). Therefore, it is recommended that all claims raised against the Defendants in their official capacity be dismissed. It is further recommended that as Defendant United States has not waived sovereign immunity with regard to the claims made in this action, that these claims be dismissed against the United States.
Defendants also assert that this Court does not have personal jurisdiction over them under Fed.R.Civ.P. 12(b)(2) because Plaintiffs did not properly serve them in their individual capacities under Fed.R.Civ.P. 12(b)(5) (Doc. 15, pp. 4-6). The Court notes that "one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process." Hansberry v. Lee, 311 U.S. 32, 40 (1940) (citing Pennoyer v. Neff, 95 U.S. 714 (1877)). It is also noted that "defendants in Bivens actions must be served as individuals, pursuant to Rule 4 (e)." Simpkins v. District of Columbia Government, 108 F.3d 366, 369 (D.C. Cir. 1997) (citations omitted). Defendants' assertion that they were not individually served as required in Rule 4(e) is undisputed (Doc. 15, p. 5); though Plaintiffs state that all defendants were served by certified mail (Doc. 18, ¶ 2), Court documents demonstrate that no individual Defendant was served at his or her place of residence as required in Fed.R.Civ.P. 4(e) and Ala.R.Civ.P. 4(c)(1) ( see Docs. 8-9, 11). Although the Defendants were apparently served in their official capacities, they were not served in their individual capacities. Therefore, Defendants' assertions that this action should be dismissed against them for insufficiency of service of process, under Fed.R.Civ.P. 12(b)(5), and because the Court lacks personal jurisdiction over them, under Fed.R.Civ.P. 12(b)(2), is well-founded. The Court recommends that Defendants' Motion to Dismiss be granted as to these assertions.
Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971). Plaintiffs, in their complaint, specifically designated this as a Bivens action (Doc. 1, p. 1).
Fed.R.Civ.P. 4(e) explains how to acquire service upon individuals within a judicial district of the United States.
Court notes that Simpkins, a District of Columbia Court of Appeals case, cites decisions from the second, third, sixth, seventh, ninth, and tenth circuits in reaching its holding. The Court notes that the Eleventh Circuit Court of Appeals has apparently not addressed this issue.
The federal rule provides that service upon an individual shall be made "pursuant to the law of the state in which the district court is located," Fed.R.Civ.P. 4(e)(1), or by delivering "a copy of the summons and of the complaint to the individual personally or by leaving copies thereof at the individual's dwelling house or usual place of abode with some person of suitable age and discretion then residing therein or by delivering a copy of the summons and of the complaint to an agent authorized by appointment or by law to receive service or process." Fed.R.Civ.P. 4(e)(2). Ala.R.Civ.P. 4(c)(1) is virtually identical to Fed.R.Civ.P. 4(e)(2).
Defendants have also asserted the defense that Plaintiffs have failed to state a claim upon which relief may be granted under Fed.R.Civ.P. 12 (b)(6) (Doc. 15, pp. 8-20). That defense, comprised of four different arguments, will not be addressed in this report since this action is due to be dismissed on the other grounds discussed above.
In summary, the Undersigned has found that this Court does not have subject matter jurisdiction over the claims in this action raised against the Defendants in their official capacities under Rule 12(b)(1). Furthermore, since Defendant United States has not waived sovereign immunity with regard to the claims made in this action, this action should be dismissed against the United States. A further determination has been made that Plaintiffs did not properly serve Defendants in their individual capacities under Rule 12(b)(5) and that this Court, therefore, lacks personal jurisdiction under those Defendants under Rule 12(b)(2). The Court notes that Plaintiffs have wholly failed to present arguments supporting their assertions that their claims are good and that this action should not be dismissed ( see Doc. 19). Therefore, it is recommended that this action be dismissed and that judgment be entered in favor of Defendants S. Diane Manning, Lillie J. Madison, Diane Henderson, Bill Thompson, Richard F. Moran, and the United States and against Plaintiffs William T. Praytor and Deborah S. Praytor on all claims.