Opinion
CV F 02-5077 AWI DLB
June 28, 2002
On October 23, 1998, the court entered judgment in civil case CV F 95-5346 OWW SMS against Glen D. Bell, Jeanette Bell, Glen and Jeanette Bell as trustees of the Glen D. Bell Family Trust, Glen D. Bell and Jeanette Bell as trustees of the Racine Trust, Glen D. Bell as trustee of Stark Management Company, and Stockton Financial Corporation. Pursuant to the judgment, the United States was authorized to recover against Glen D. Bell in the amount of $2,680,283.30, plus interest and other statutory additions as allowed by law. The judgment authorized the United States to recover against Jeanette Bell in the amount of $1,022,865.20, plus interest and other statutory additions as allowed by law.
The judgment also confirmed that the United States had valid federal tax liens in the amounts stated above against all property and property rights of Glen D. Bell and Jeanette Bell, specifically, but not limited to, the property located at 3549 Kiernan Road, Modesto, California. The judgment authorized the United States to enforce the federal tax liens and sell the property pursuant to 28 U.S.C. § 2001.
Stockton Financial Corp., a named defendant in the action, was found to have a promissory note against a portion of the property owned by the Bells. That lien was adjudged to have priority over the federal tax liens and that upon sale of the property, Stockton Financial Corp. would recover $5,527.32 for attorney's fees incurred in defense of the action.
Subsequent to the entry of judgment, numerous post-judgment orders have been filed in case CV F 95-5346 OWW SMS, including, among others, an order of judicial sale, an order denying the Bells' motion to vacate the judgment pursuant to Rule 60(b) of the Federal Rules of Civil Procedure, and an order of ejectment of all unauthorized persons from the property located in Modesto, California.
On January 16, 2002, Glen D. Bell, Jeanette Bell, Wayne Rulon Bevan (lessor) and the Funding Center (a trust with Wayne Rulon Bevan as executive trustee) (collectively "Plaintiff") filed the complaint currently before the court, naming as defendants the United States of America, G. Patrick Jennings (Tax Division Trial Attorney), Charles J. Stevens (U.S. Attorney), Oliver W. Wanger (U.S. District Court Judge), Paul H. O'Neill (Secretary of the Treasury), Randy Reece (Revenue Agent) and Does 1-100 (collectively "Defendants"). The complaint appears to allege that the United States District Court for the Eastern District of California lacked subject matter jurisdiction in case CV F 95-5346 OWW SMS. Specifically, the complaint alleges that there was not a proper assessment, verified notice and demand, or a procedurally proper warrant for distraint issued against the Bells or the property in question. Also, the complaint alleges that the U.S. officers, acting in their official capacity, were not properly authorized to carry out their duties in connection with the case because of improper procedures and a lack of jurisdiction by the court. In its prayer for relief, the complaint states that Plaintiffs request the court cancel all liens, return all sums taken or withheld from them by the Defendants in the prior case, award them three times the difference between the sum of money actually owed and the amount of debt Defendants claim they owe, award them statutory interest, costs of bringing the current action, and punitive damages as determined by a jury.
The complaint and the contents within are hard to decipher because the allegations are made in question form and there are citations to records with no explanation as to why they are included. Due to Plaintiffs proceeding pro per, the court has attempted to ascertain those claims appears Plaintiffs are raising.
The addendum to the complaint, filed the same day on January 16, 2002, reiterates the allegations concerning the previous court lacking subject matter jurisdiction and argues that Plaintiffs are within the time limitations for filing a motion to vacate a judgment under Rule 60(b) of the Federal Rules of Civil Procedure.
On March 18, 2002, Defendant United States brought a motion to substitute party, strike the complaint as to Plaintiff the Funding Center, dismiss Plaintiff Wayne R. Bevan and Plaintiff the Funding Center for lack of standing, and dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. First, the United States contends that because the federal officers named in the complaint are all being sued solely in their official capacity, the United States is entitled to be substituted in their place. Second, the United States contends that the complaint, as to Plaintiff the Funding Center, must be stricken because it is an entity that is not being represented by an attorney as required. Third, the United States contends that Plaintiffs Bevan and the Funding Center lack standing to bring the current suit because neither was a party to case CV F 95-5346 OWW SMS nor do they have a valid interest in the property in question. Last, the United States contends that since Plaintiffs are precluded from relitigating the validity of the tax assessments against them, their complaint fails to state a claim upon which relief can be granted pursuant to Rule 12(b)(6). Based on the same preclusion argument, the United States argues that Plaintiffs' claim pursuant to Rule 60(b) is without merit.
On April 30, 2002, this court filed an order vacating the hearing on Defendant United States' motions originally set for May 6, 2002. The court found that Plaintiffs had failed to file an opposition or a notice of non-opposition to Defendant United States' motions. Therefore, pursuant to Local Rule 78-230(c), Plaintiffs were not entitled to be heard at oral argument in opposition to the motions. This court found the motions suitable for decision without oral argument and took the matter under submission as of May 6, 2002.
DISCUSSION
From this court's examination of Plaintiffs' complaint, and without specifically addressing its merits or those specifically raised in Defendant United States' motions, this court lacks the necessary subject matter jurisdiction to adjudicate Plaintiffs' claims.
A. Federal Rule of Civil Procedure 8(a)
Rule 8(a) of the Federal Rules of Civil Procedure requires that a pleading contain "a short and plain statement of the grounds upon which the court's jurisdiction depends, unless the court already has jurisdiction and the claim needs no new grounds of jurisdiction to support it[.]" Fed R. Civ. P. 8(a)(1).
It is a fundamental legal principle that federal courts are courts of limited jurisdiction. "i federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears." Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989) (citation omitted). Lack of subject matter jurisdiction may be raised by any party at any time, and it is never waived: "[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action." Fed.R.Civ.P. 12(h)(3); Hernandez v. McClanahan, 996 F. Supp. 975, 977 (9th Cir. 1998). Federal courts "jealously" guard their own jurisdiction and, where appropriate, will dismiss a case for lack of subject matter jurisdiction even if the issue is not raised by the parties. See In re Mooney, 841 F.2d 1003, 1006 (9th Cir. 1988), overruled on other grounds, Partington v. Gedan, 923 F.2d 686 688 (9th Cir. 1991). For this reason this court can raise the issue of subject matter jurisdiction sua sponte. See American Vantage Cos., Inc. v. Table Mountain Rancheria, ___ F.3d ___, 2002 WL 1301449 *1, *1 (9th Cir. 2002).
The plaintiff in a case bears the burden of establishing that the court has jurisdiction. Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002); see also KVOS, Inc. v. Assoc. Press, 299 U.S. 269, 278 (1936). In this case, Plaintiffs' complaint does label paragraph 2 as "JURISDICTION." However, Plaintiffs do not cite a recognized statute or case law giving this court subject matter jurisdiction over their claim against Defendants in paragraph 2. Though the court recognizes that Plaintiffs are proceeding unassisted by counsel, the court is unable to determine the applicable authority upon which Plaintiffs rely giving this court jurisdiction. Until this court is presented with the authority that gives it jurisdiction over Plaintiffs' claims, it is improper to consider the merits of either parties' claims and motions.
Plaintiffs assert that the United States Constitution gives this court jurisdiction pursuant Article VI because this "action is a controversy in law. . ., and Plaintiffs have a right to a trial by jury and the government has a duty to provide the trial by jury."
The court will give Plaintiffs an opportunity to file an amended complaint that alleges the grounds under which this court has jurisdiction over their claims. While the court recognizes the factual basis of the complaint concerns allegations that the prior court did not have jurisdiction, it is unclear what the legal basis is for this action. Because of Plaintiffs' pro se status, the court will give Plaintiffs notice of their pleading deficiency and an opportunity to amend.
2. Internal Revenue Code Section 7422 ( 26 U.S.C. § 7422)
From the court's examination of Plaintiffs' complaint, it appears that Plaintiffs may be attempting to raise a claim under Internal Revenue Code ("IRC") section 7422(a). This section deals with civil actions for refunds of "any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected . . . Though Plaintiffs did not raise this statute in their complaint, it is possible this action is based on section 7422(a). If this is a statute that Plaintiffs relied upon in bringing this action, or intend to rely on in the future, the court will address the jurisdictional aspects of section 7422.
Under IRC section 7422(a), a civil action for a refund may only be maintained in any court after "a claim for refund or credit has been duly filed with the Secretary [of the Treasury], according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof." Therefore, in order for this court to have jurisdiction under a claim brought pursuant to IRC § 7422(a), the person claiming the refund must first file a claim with the Secretary of the Treasury for a refund that complies with the regulations established for that particular statute. See 26 C.F.R. § 301.6402-2(b)(1); see also Quarty v. United States, 170 F.3d 961, 972 (9th Cir. 1999) ("Compliance with these specificity requirements is a prerequisite to subject matter jurisdiction over a claim for a refund."); Boyd v. United States, 762 F.2d 1369, 1371 (9th Cir. 1985) (same). The purpose of the requirement that claims first be presented to the Secretary of the Treasury is to ensure that the IRS is given adequate notice of each claim and the facts giving rise to them so that a proper administrative investigation and determination may be made. Quarty, 170 F.3d at 972. Furthermore, a district court is generally void of jurisdiction over suits for the refund of penalty amounts until the taxpayer has paid the " full amount" of the contested penalty. Thomas v. United States, 755 F.2d 728, 729 (9th Cir. 1985) (emphasis in original); see also Flora v. United States, 357 U.S. 63 (1958), aff'd on reh'g, 362 U.S. 145 (1960).
After reviewing Plaintiffs' complaint and all papers subsequently filed, the court is unable to find documentation by Plaintiffs that they would meet the jurisdictional requirements for a suit pursuant to IRC § 7422(a). The statute, by its language, requires administrative exhaustion before filing suit in any court. If this is a statute Plaintiffs intend to rely upon when filing any amended complaint, Plaintiffs must provide documentation that Plaintiffs have complied with a] requirements necessary under section 7422(a) and the applicable regulations. Also, Plaintiffs would need to submit documentation that shows they have paid the full amount of the penalty that they are trying to recover pursuant to section 7422(a).
C. Federal Rule of Civil Procedure 60(b)
In the addendum to Plaintiffs' complaint, Plaintiffs assert that they are entitled to relief from the judgment issued against them in the prior case pursuant to Rule 60(b)(4) of the Federal Rules of Civil Procedure.
Rule 60(b)(4) allows for a court to relieve a party from a final judgment where the judgment is found to be void. Though the court is not going to address the merits of Plaintiffs' claims, relief under Rule 60(b) is ordinarily obtained by motion in the court that rendered the judgment. See Wright, Miller Kane, Federal Practice and Procedure: Civil 2d § 2865. If Plaintiffs raise Rule 60 as the basis for their legal action in the amended complaint, Plaintiffs must provide authority for how Rule 60 provides this court with independent jurisdiction.
D. Estoppel
Additionally, the court notes that it appears Plaintiffs would be estopped from raising a Rule 60 motion because the Ninth Circuit Court of Appeals has ruled that the district court, in case CV F 95-5346 OWW SMS, did not err when it denied Plaintiffs' Rule 60(b)(4) motion on the ground that the court lacked jurisdiction. United States v. Bell, No. 00-16515, 2001 U.S. App. LEXIS 19482, *2 (9th Cir. April 28, 2001). The Ninth Circuit stated that Plaintiffs failed to establish that the district court lacked jurisdiction. Id.
The court recognizes that this is an unpublished opinion; however, it takes judicial notice of the record from the previous case in which the decision by District Court Judge Oliver W. Wanger was affirmed by the Ninth Circuit. Ninth Circuit Rule 36-3 allows unpublished cases to be cited for res judicata and factual purposes.
Res judicata, or claim preclusion as it is commonly known, bars relitigation in a subsequent action of any claims that were or could have been raised in an earlier action. Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981). The res judicata doctrine applies where there is: (1) an identity of claims; (2) a final judgment on the merits; and (3) an identity or privity between the parties. Western Radio Services Co., Inc. v. Glickman, 123 F.3d 1189, 1192 (9th Cir. 1997). The doctrine of res judicata is meant to protect parties against being harassed by repetitive actions. See Clements v. Airport Auth. of Washoe, 69 F.3d 321, 329 (9th Cir. 1995). It also "conserves judicial resources" and "fosters reliance on judicial action by minimizing the possibility of inconsistent decisions." United States v. Schimmels, 127 F.3d 875 881 (9th Cir. 1997). Thus, Plaintiffs would have to establish how claims brought in this action are not barred because they have already been litigated.
E. Judicial Immunity
The court also notes that the complaint lists Judge Oliver W. Wanger as a defendant. Plaintiffs are hereby informed that a judge is generally immune from a civil action for damages. Mireles v. Waco, 502 U.S. 9, 9 (1991); Dennis v. Sparks, 449 U.S. 24, 27 (1980); Pierson v. Ray, 386 U.S. 547 (1967); Moore v. Brewster, 96 F.3d 1240, 1244 (9th Cir. 1996). A judge's immunity applies no matter how "erroneous the act may have been, and however injurious in its consequences it may have proved to the plaintiff." Cleavinger v. Saxner, 474 U.S. 193, 199-200 (1985). A judge is immune even if the plaintiff alleges the judge committed grave procedural errors or took an action in excess of the judge's judicial authority. Moore, 96 F.3d at 1244; Schucker v. Rockwood, 846 F.2d 1202, 1204 (9th Cir. 1988).
A judge loses absolute immunity only when he acts in the clear absence of all jurisdiction or performs an act that is not judicial in nature.Schucker, 846 F.2d at 1204. The Supreme Court has explained the narrow exception that is meant by the "absence of jurisdiction" as follows:
[I]f a probate judge, with jurisdiction over only will and estates, should try a criminal case, he would be acting in the clear absence of jurisdiction and would not be immune from liability for his action; on the other hand, if a judge of a criminal court should convict a defendant of a nonexistent crime, he would merely be acting in excess of his jurisdiction and would be immune.Stump v. Sparkman, 435 U.S. 349, 357 (1978). Thus, a judge's mistake over whether a particular statute or fact pattern provides him with jurisdiction is not actionable.
Accordingly, Plaintiffs would have to show in any amended complaint how Judge Wanger can be named as a defendant.
F. Amended Complaint
Finally, as discussed above, Plaintiffs must allege in any amended complaint the basis of the court's jurisdiction. Whether Plaintiffs are basing their claim for relief upon IRC section 7422(a) or some other theory, Plaintiffs will need to make clear in their complaint the claim or claims upon which they base this action. Rule 8(a)(2) requires a "short and plain statement." The purpose of the complaint is to provide the opposing party with fair notice of the claim against it. Lynn v. Sheet Metal Workers' Intern. Ass'n, 804 F.2d 1472, 1482 (9th Cir. 1986). Although the Federal Rules have adopted a flexible pleading policy, a complaint must still give fair notice and state the elements of the claim plainly and succinctly. Jones v. Community Redev. Agency, 733 F.2d 646, 649 (9th Cir. 1984).
In addition, Plaintiffs are informed that the court cannot refer to a prior pleading in ordei to make Plaintiffs' amended complaint complete. Local Rule 15-220 requires that an amended complaint be complete in itself without reference to any prior pleading. This is because, as a general rule, an amended complaint supersedes the original complaint. See Loux v. Rhay, 375 F.2d 55, 57 (9th Cir. 1967). Once Plaintiffs file an amended complaint, the original pleading no longer serves any function in the case. Therefore, in any amended complaint, as in an original complaint, each claim and the involvement of each defendant must be sufficiently alleged.
CONCLUSION AND ORDER
For the reasons stated in the above memorandum opinion, the court orders:
(1) The complaint is DISMISSED WITH LEAVE TO AMEND;
(2) Plaintiffs have thirty (30) days in which they may file and serve an amended complaint that alleges the jurisdiction of this court and clearly states the claim or claims upon which they seek relief;
(3) Defendant has twenty (20) days, per Rule 12(a)(1)(A) of the Federal Rules of Civil Procedure, in which to file and serve an opposition or other response to Plaintiffs' amended complaint
(4) In light of the court's dismissal of the complaint for lack of jurisdiction, Defendant's motions are DENIED as moot; and
(5) Plaintiffs are forewarned that failure to timely file an amended complaint will result this action's dismissal.