United States District Court, Northern District of California
May 15, 2000
LINDA KRIEG AND KEITH KRIEG, PLAINTIFFS,
AVA MILLS AND FRANK MCNULTY, DEFENDANTS.
The opinion of the court was delivered by: Illston, District Judge.
ORDER GRANTING MOTION TO DISMISS
On September 30, 1998, plaintiffs Linda Krieg and Keith Krieg
filed suit against defendants Ava Mills (now Ava Pointer) and
Frank McNulty, both Internal Revenue Service (IRS) agents, for
declaratory relief, injunctive relief, and damages. The
complaint alleges that the defendants violated plaintiffs'
constitutional rights and the Internal Revenue Code when
defendants, in their capacity as IRS agents, caused Notices of
Federal Tax Lien Under Internal Revenue Laws to be filed in San
Mateo County, California.*fn1
The liens in question were attached to plaintiffs' property
due to plaintiffs' alleged tax deficiencies for their fiscal
years 1990, 1991, and 1992.*fn2 Plaintiff Linda Krieg is
alleged to owe more than $130,000 in back taxes and penalties,
and plaintiff Keith Krieg more than $100,000 in back taxes and
penalties, for fiscal years 1990, 1991 and 1992. In 1997,
defendant McNulty obtained approval from IRS District Counsel to
file a nominee lien against Keith and Linda Krieg, and then
caused seven nominee liens to be prepared and filed with the San
Mateo County Recorder.*fn3 McNulty Decl., ¶¶ 3-6.*fn4 After
these liens were prepared, they were forwarded to defendant
Mills, a revenue officer of the Internal Revenue Service who is
also posted in Oakland, California, and who was at the time of
these events Section Chief of Support, Special Procedures
Function. Pointer Decl., ¶ 1-2. In accord with her job
responsibilities, on August 6, 1997, Mills reviewed and signed
the nominee liens before they were filed. Pointer Decl., ¶ 3.
In October 1997, plaintiffs and their nominees appealed the
filing of the liens. On November 14, 1997, after considering all
the protests and appeals, an IRS appeals officer concluded that
appropriate steps had been taken in the filing of the liens and
upheld them against challenge. In August 1998, plaintiffs filed
an appeal with the District Director of the Internal Revenue
Service, which was denied by letter in October 1998. McNulty
Decl., ¶¶ 15-16, Ex. S-T. In October 1998, defendant McNulty
discovered clerical errors in the liens and filed amended liens
in San Mateo County which corrected those errors. McNulty Decl.,
¶¶ 17-18, Ex. U, W.
On September 30, 1998, plaintiffs filed suit in this Court.
Plaintiffs' complaint alleges that these liens were filed in
violation of their right to due process because the IRS failed
to properly assess the income tax liabilities against plaintiffs
for the years 1990, 1991 and 1992, and that the IRS is engaging
in fraud and coercion against plaintiffs.
On March 3, 2000, defendants filed the present motion to
dismiss for lack of subject matter jurisdiction, failure to
state a claim upon which relief can be granted, and for partial
"It is a fundamental principle that federal courts are courts
of limited jurisdiction. The limits upon federal jurisdiction,
whether imposed by the Constitution or by Congress, must be
neither disregarded nor evaded." Owen Equipment & Erection Co.
v. Kroger, 437 U.S. 365, 374, 98 S.Ct. 2396, 2403, 57 L.Ed.2d
274 (1978). "A federal court is presumed to lack jurisdiction in
a particular case unless the contrary affirmatively appears."
General Atomic Co. v. United Nuclear Corp., 655 F.2d 968,
968-69 (9th Cir. 1981). Accordingly, the burden rests on the
asserting federal subject matter jurisdiction to prove its
existence. See Kokkonen v. Guardian Life Ins. Co. of America,
511 U.S. 375, 377, 114 S.Ct. 1673, 1675, 128 L.Ed.2d 391 (1994).
When deciding a motion to dismiss for lack of subject matter
jurisdiction, a court must take all the allegations in
plaintiffs complaint as true. See NL Indus. v. Kaplan,
792 F.2d 896, 898 (9th Cir. 1986).
A motion to dismiss for failure to state a claim will be
denied unless it appears that the plaintiff can prove no set of
facts which would entitle it to relief. See Conley v. Gibson,
355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957);
Fidelity Fin. Corp. v. Federal Home Loan Bank, 792 F.2d 1432,
1435 (9th Cir. 1986). All material allegations in the complaint
will be taken as true and construed in the light most favorable
to the plaintiff. NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898
(9th Cir. 1986). In deciding a motion to dismiss, a court may
not consider material outside of the complaint, except that it
may consider exhibits submitted with the complaint and take
judicial notice of facts outside of the pleadings. See Levine
v. Diamanthuset Inc., 950 F.2d 1478, 1483 (9th Cir. 1991); Hal
Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542,
1555 n. 19 (9th Cir. 1989); Mack v. South Bay Beer Distrib.,
Inc., 798 F.2d 1279, 1282 (9th Cir. 1986).
A. Sovereign Immunity
The United States is a sovereign nation, and as such, it may
not be sued absent consent. See Lehman v. Nakshian,
453 U.S. 156, 160, 101 S.Ct. 2698, 2701, 69 L.Ed.2d 548 (1981); Gilbert
v, DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985). If the United
States has not consented to the suit, subject matter
jurisdiction is lacking and the complaint must be dismissed,
See Fed.R.Civ.P. 12(h)(3); United States v. Mitchell,
463 U.S. 206, 212, 103 S.Ct. 2961, 2965, 77 L.Ed.2d 580 (1983);
Gilbert, 756 F.2d at 1458. This immunity protects not only the
United States but its agents and officers. See Hawaii v.
Gordon, 373 U.S. 57, 58, 83 S.Ct. 1052, 1052-53, 10 L.Ed.2d 191
(1963); Gilbert, 756 F.2d at 1458; Hutchinson v. United
States, 677 F.2d 1322, 1327 (9th Cir. 1982). "[S]uit against
IRS employees in their official capacity is essentially a suit
against the United States." Gilbert, 756 F.2d at 1458.
When the government is sued, the plaintiff in that suit bears
the burden of showing that the government has waived its
sovereign immunity. See Sopcak v. Northern Mountain Helicopter
Service, 52 F.3d 817, 818 (9th Cir. 1995). The general
jurisdiction statutes cited in plaintiffs' complaint are not
sufficient to establish waiver of sovereign immunity. See
Arford v. United States, 934 F.2d 229, 231 (9th Cir. 1991);
Complaint, ¶ 6.
1. Nature of the Relief Sought
Although plaintiffs claim to be suing defendants in their
individual capacities only, plaintiffs seek both injunctive
relief and a declaratory judgment. To the extent that plaintiffs
seek such remedies, which would operate against the United
States, their suit is against the United States rather than
these individual defendants. See Hawaii, 373 U.S. at 58, 83
S.Ct. at 1052-53 (holding suit against federal official to be
suit against United States because "relief sought nominally
against an officer is in fact against the sovereign [because]
the decree would operate against the latter"); Land v. Dollar,
330 U.S. 731, 738, 67 S.Ct. 1009, 1012, 91 L.Ed. 1209 (1947)
(suit is against sovereign if judgment sought "would interfere,
with the public administration"); Demery v. Kupperman,
735 F.2d 1139, 1145-46 (9th Cir. 1984) (test for determining whether
suit against state officials is treated as suit against state is
whether court's judgment would restrain or compel government
action); Palomar Pomerado Health Sys. v. Belshe,
180 F.3d 1104, 1108 (9th Cir. 1999) (same). This conclusion is further
bolstered by the Anti-Injunction Act, which
provides that "no suit for the purpose of restraining the
assessment or collection of any tax shall be maintained in any
court by any person." 26 U.S.C. § 7421(a). The Anti-Injunction
Act withdraws jurisdiction from state and federal courts over
any actions seeking injunctions prohibiting the collection of
federal taxes. See Enochs v. William Packing & Nav. Co.,
370 U.S. 1, 5, 82 S.Ct. 1125, 1128, 8 L.Ed.2d 292 (1962).*fn5
Accordingly, this Court lacks jurisdiction over plaintiffs'
claims for injunctive and declaratory relief.
2. Exceptions to Sovereign Immunity
Plaintiffs cite statutes which waive sovereign immunity under
certain circumstances, but these statutes do not apply in
matters involving the IRS.
a. The Declaratory Judgment Act
Under the Declaratory Judgment Act, federal courts have
jurisdiction to grant declaratory relief. See
28 U.S.C. § 2201. However, § 2201 does not convey jurisdiction to federal
courts to grant declaratory relief "with respect to federal
taxes." Id.; see also Bob Jones University v. Simon,
416 U.S. 725, 732 n. 7, 94 S.Ct. 2038, 2044 n. 7, 40 L.Ed.2d 496
(1974); Latch v. United States, 842 F.2d 1031, 1032 (9th Cir.
1988). Because all of the actions that form the basis for
plaintiffs' complaint came about during defendants' attempts to
collect or assess plaintiffs' federal tax liability, this Court
lacks jurisdiction to grant declaratory relief under
28 U.S.C. § 2201.
b. Federal Tort Claims Act
The Federal Tort Claims Act allows a private litigant to bring
causes of action, for state law torts, against the United States
and its employees acting in the scope of their employment. See
28 U.S.C. § 1346(b). However, the Federal Tort Claims Act does
not apply to "[a]ny claim arising in respect of the assessment
or collection of any tax or customs duty . . ."
28 U.S.C. § 2680(c); see also Fishburn v. Brown, 125 F.3d 979, 982 (6th
Cir. 1997); Perkins v. United States, 55 F.3d 910, 913 (4th
Cir. 1995). All of the damages plaintiffs allege arise out of
the assessment and collection of taxes by IRS agents, and
plaintiffs' suit is therefore not authorized by the FTCA.
B. Defendants' Liability in Individual Capacity
As the government concedes, sovereign immunity does not bar
actions for damages against federal officials in their
individual capacities for violations of individuals' statutory
or constitutional rights. See Bivens v. Six Unknown Named
Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct.
1999, 29 L.Ed.2d 619 (1971); Gilbert, 756 F.2d at 1458. This
Court must therefore decide whether defendants can be held
liable for the acts alleged here in their individual capacities.
1. Qualified Immunity
The defense of qualified immunity protects "government
officials . . . from liability for civil damages insofar as
their conduct does not violate clearly established statutory or
constitutional rights of which a reasonable person would have
known." Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct.
2727, 2738, 73 L.Ed.2d 396 (1982). "[R]egardless of whether the
constitutional violation occurred, the [official] should prevail
if the right asserted by the plaintiff was not `clearly
established' or the [official] could have reasonably believed
that his particular conduct was lawful." Romero v. Kitsap
County, 931 F.2d 624, 627 (9th Cir. 1991). The plaintiff bears
the burden of proving the existence of a "clearly established"
right at the time of the allegedly impermissible conduct. See
Maraziti v. First Interstate Bank, 953 F.2d 520, 523 (9th Cir.
1992). If the plaintiff meets this burden, then the defendant
bears the burden of establishing that his actions were
reasonable, even if he violated the plaintiffs constitutional
rights. Doe v. Petaluma City School Dist., 54 F.3d 1447, 1450
(9th Cir. 1995); Neely v. Feinstein, 50 F.3d 1502, 1509 (9th
Cir. 1995); Maraziti, 953 F.2d at 523,
The government argues that IRS agents' collection of federal
income taxes by following procedures established by statute does
not violate any "clearly established right" under the
Constitution. The processes of lien and levy have been upheld
against constitutional challenges. See G.M. Leasing Corp. v.
United States, 429 U.S. 338, 351-52, 97 S.Ct. 619, 628, 50
L.Ed.2d 530 (1977) (seizure of property to collect delinquent
taxes did not violate Fourth Amendment); Phillips v.
Commissioner, 283 U.S. 589, 596-97, 51 S.Ct. 608, 611, 75 L.Ed.
1289 (1931) (summary procedures to collect tax revenue are
constitutional); Todd v. United States, 849 F.2d 365, 369 (9th
Cir. 1988) (same). The Ninth Circuit has held that the
collection of taxes does not violate any clearly established
right under the Constitution. See Wages v. IRS, 915 F.2d 1230,
1235 (9th Cir. 1990) (dismissing action alleging violations of
Fourth and Fifth Amendments in collection of taxes on qualified
immunity grounds and noting that Ninth Circuit "ha[s] never
recognized a constitutional violation arising from the
collection of taxes"). See also Del Elmer v. Metzger,
967 F. Supp. 398, 404 (S.D.Cal. 1997) ("[T]he IRS's lawful collection
of taxes does not violate a person's Fifth Amendment right to
due process because the post-seizure remedies available to the
taxpayer are adequate to protect the taxpayer's due process
rights") (citations omitted). Plaintiffs have not alleged any
acts by these defendants that would take this case outside of
this general rule. Accordingly, defendants are immune from suit
based on the constitutional violations alleged in plaintiffs'
2. Bivens Action Not Permissible
Furthermore, the availability of remedies under the Internal
Revenue Code preclude plaintiffs from bringing a Bivens action
against IRS agents. "When the design of a government programs
suggests that Congress has provided what it considers adequate
remedial mechanisms for constitutional violations that may occur
in the course of its administration, we have not created
additional Bivens remedies." Schweiker v. Chilicky,
487 U.S. 412, 423, 108 S.Ct. 2460, 2468, 101 L.Ed.2d 370 (1988). Congress
has enacted statutory provisions which allow taxpayers to sue
the government for a refund of taxes, third parties to sue to
recover erroneously levied property, and taxpayers or third
parties to recover damages for certain reckless collection
efforts. See 26 U.S.C. § 7426, 7432, 7433. 26 U.S.C. § 7433
provides that these provisions are "the exclusive remedy for
recovery damages" based on acts by IRS employees, and courts
have consistently held that taxpayers may not bypass these
statutory remedies by bringing Bivens actions for
constitutional violations, against individual employees of the
IRS. See Wages, 915 F.2d at 1235 ("[T]he remedies provided by
Congress, particularly the right to sue the government for a
refund of taxes improperly collected, foreclose a damage action
under Bivens in this situation"); Fishburn, 125 F.3d at
982-83 (holding that legislative remedies preclude Bivens
actions against IRS agents for tax assessment and collection
activities); Vennes v. An Unknown Number of Unidentified
Agents, 26 F.3d 1448, 1453 (8th Cir. 1994) (same); McMillen v.
U.S. Dept. of Treasury, 960 F.2d 187, 190-91 (1st Cir. 1991)
(same). For this additional reason, plaintiffs' action is barred
and must be dismissed.
C. Statutory Claims
After the government urged this Court to dismiss plaintiffs'
claim for violation of 26 U.S.C. § 7431 for failure to state a
claim and to grant partial summary adjudication as to
plaintiffs' causes of action under 26 U.S.C. § 7432 and 6325,
plaintiffs filed a motion to dismiss their causes
of action under these statutes. Plaintiffs' motion explains that
"the matters with the IRS itself are to be handled at the lowest
level Administratively." Mot. to Dismiss Compl. Violation
26 U.S.C. § 7431, 7432 and 6325. The Court grants plaintiffs'
request that these causes of action be dismissed.*fn6
For the reasons discussed, the Court hereby GRANTS defendants'
motion to dismiss plaintiffs' complaint with prejudice and
without leave to amend. Defendants' motion for partial summary
adjudication is therefore moot.
IT IS SO ORDERED.