Opinion
Civil Action No. 04-746 Section "B".
March 29, 2005
ORDER AND REASONS
Defendant, the United States of America, moves, pursuant to FRCP 12(b) (1) and 12(b) (5), to dismiss Plaintiff's case because: (1) Plaintiff has not fulfilled the jurisdictional prerequisites to filing this suit and (2) Plaintiff has not served the United States with process as required by FRCP 4(i) (1). For the following reasons, Defendant's motion to dismiss is hereby GRANTED.
BACKGROUND
Plaintiff filed a complaint against the United States of America on March 12, 2004, alleging "improper collection action" during 2002 and 2003 pursuant to the "Internal Revenue laws." (Rec. Doc. No. 1 at 1). The initial complaint erroneously stated that this Court has jurisdiction over the controversy pursuant to Title 28, U.S.C. § 1346(e) and Title 26, U.S.C. § 7429(b). Id. On August 26, 2004, this Court granted leave to amend the complaint, allowing Plaintiff to substitute the jurisdictional sections to reference Title 28, U.S.C. § 1346(a)(1) and Title 26, U.S.C. § 7433. (Rec. Doc. No. 5).Plaintiff claims that between 1997 and 2002, "the District Director of [the] IRS issued a deficiency determination of taxes due from We Care Community Development Corporation," (hereinafter, "We Care,"), during which period Plaintiff was the chief operating officer of We Care. Id. Plaintiff alleges further that the Internal Revenue Service ("IRS") wilfully and intentionally made no attempt to serve notice of such deficiency determination to his then-current address, but instead, used a long-outdated address even though the IRS was fully aware of his correct location. (Rec. Doc. No. 1 at 1-2). On or about August 9, 2002, the IRS filed a Notice of Federal Tax Lien in St. Tammany Parish, Louisiana, against Plaintiff's real property and sent Plaintiff legal notice at the proper address. (Rec. Doc. No. 1 at 2). According to Plaintiff, the IRS then began "systematic seizures" of his social security disability benefits. Id.
Through its Lien Technician, Wallace Scheindau.
Plaintiff, after becoming aware of the "seizures," requested and received a due process hearing regarding the IRS collection action; the IRS decided on October 6, 2003, however, to uphold Plaintiff's tax liability, although the amount owed was decreased by $11,602.75 to $25,664.78. (Rec. Doc. No. 1 at 2-3). Plaintiff maintains that the IRS assessment is erroneous and claims that he has exhausted the administrative remedies available. (Rec. Doc. No. 1 at 2, 3). "Plaintiff filed a petition with the Tax Court," which was dismissed as being outside its jurisdiction. (Rec. Doc. No. 1 at 3). Plaintiff subsequently filed this action, requesting that this Court (1) assess damages for the allegedly wrongful acts of Defendant, (2) release and discharge Plaintiff and his property from any and all liens derived from the deficiency determination of taxes at issue, (3) have returned to Plaintiff all funds that were seized, (4) grant Plaintiff costs and attorney's fees and (5) grant such other and further relief as appropriate. Id.
Defendant makes three arguments to support its motion to dismiss: (1) this Court has no jurisdiction over this matter because Plaintiff did not first file an administrative claim for his damages with the IRS, as outlined in Title 26 CFR § 301.7433-1(e); (2) the statutes that Plaintiff relies upon for a jurisdictional basis for his claims do not establish jurisdiction; and (3) Plaintiff's insufficiency of service of process upon Defendant.
(Rec. Doc. No. 2 at 2).
(Rec. Doc. No. 2 at 3).
(Rec. Doc. No. 2 at 4).
In response to Defendant's first argument regarding the requirement that Plaintiff exhaust administrative remedies prior to filing suit, Plaintiff submitted a copy of an IRS decision letter, dated October 6, 2003. See (Rec. Doc. No. 4, Attachment). Second, Plaintiff successfully established federal jurisdiction with the filing of his amended complaint, citing the appropriate statutory provisions. (Rec. Doc. No. 6 at 1). Finally, Plaintiff counters the government's insufficiency of service of process argument by stating that he used a process that has the same effect of verifying that service was attempted. (Rec. Doc. No. 4 at 1).
LAW AND ANALYSIS
A. Jurisdiction
District courts have jurisdiction of actions against the United States for the recovery of any internal-revenue tax alleged to have been wrongfully assessed or collected in any manner. See 28 U.S.C. § 1346(a)(1). If any officer or employee of the IRS recklessly, intentionally, or negligently disregards any provision or regulation under the Internal Revenue Code, a taxpayer may bring a civil action for damages against the United States in district court. See 26 U.S.C. § 7433(a). The taxpayer will not be awarded a judgment for damages, however, unless the court determines that he has exhausted the administrative remedies available to him within the IRS. See 26 U.S.C. § 7433(d)(1). B. Service of Process
Rule 4(i) (1) of the Federal Rules of Civil Procedure outlines the procedure for serving the United States:
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 clerical employee designated by the United States attorney in a writing filed with the clerk of the court 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. . . .
Fed.R.Civ.P 4(I) (1) (emphasis added). "[T]he core function of service is to supply notice of the pendency of a legal action, in a manner and at a time that affords the defendant a fair opportunity to answer the complaint and present defenses and objections." Henderson v. United States, 517 U.S. 654, 672 (1996).
The Eastern District of Louisiana has held that the rule governing service of process "should not be construed so narrowly or rigidly as to prevent relief from dismissal in every case in which a plaintiff's method of service suffers from a technical defect." See Roach v. United States Air Force, 1993 U.S. Dist. LEXIS 303, 1-2 (E.D. La., Jan. 12, 1993) (Clement, J.) (citations omitted); Curtis v. United States Postal Serv., 1993 U.S. Dist. LEXIS 9949, 4 (E.D. La., July 15, 1993) (Clement, J.) (citations omitted). In so ruling, this Court adopted four factors that must all be satisfied in order to make an exception to the requirements of the Federal Rules of Civil Procedure: "(1) The necessary parties in the government have actual notice of a suit; (2) The government suffers no prejudice from a technical defect in service; (3) There is justifiable excuse for the failure to serve properly; and (4) The plaintiff would be severely prejudiced if the complaint were dismissed." See Roach, 1993 U.S. Dist. LEXIS at 2; Curtis, 1993 U.S. Dist. LEXIS at 4-5.
DISCUSSION
Plaintiff's amended complaint establishes jurisdiction and alleges that Plaintiff has exhausted the administrative remedies available to him through the IRS. In any case, failure to exhaust administrative remedies would only bar Plaintiff from getting a favorable judgment, not defeat jurisdiction. Defendant's challenges to jurisdiction are without merit.
With respect to Defendant's insufficiency of service ground for dismissal, Plaintiff does not fair as well. While Plaintiff acknowledges that he failed to comply with the governing procedural rule, he argues that there is no significant difference between the required certified or registered mail process and the certificate of mailing process that he used. In the first instance, Plaintiff's argument is unpersuasive because the United States Postal Service absolutely distinguishes between certified mail and a certificate of mailing. Second, Plaintiff's argument does not survive the four-factor test, which carves out a limited exception to the federal rules procedure.
Court Staff was informed by United States postal service personnel that they keep a permanent record of certified and registered mail, but there is no such record keeping for certificates of mailing. The only proof that something was mailed when using the certificate of mailing process is the receipt that sender receives at the point of purchase. Since no signature is required at the point of delivery, there is no legal proof that service of process was ever completed. The point of service of process is not just to verify "that service was attempted," as supposed by Plaintiff's opposition to the motion to dismiss.
Although it appears that the necessary parties in the government had actual notice of Plaintiff's suit and did not suffer any prejudice from a technical defect in service, Plaintiff has offered no justifiable excuse for the failure to serve properly and this Court finds that he would not be severely prejudiced if this complaint were dismissed.
Accordingly, it is ORDERED that Defendant's motion to dismiss is hereby GRANTED.