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Rivas v. California Franchise Tax Board

December 23, 2008


The opinion of the court was delivered by: Oliver W. Wanger United States District Judge



This case arises out of a February 23, 2006 search of Plaintiffs' Michelle Rivas' ("Rivas") and Thomas Kaschak's ("Kaschak") residence, conducted by California Franchise tax Board ("FTB") agents on February 23, 2006, and Kaschak's January 9, 2007 arrest on charges of tax evasion. Plaintiffs allege that Defendants FTB, John Chiang, the California State Controller and Chairman of the FTB, and Slue Railsback, a FTB Senior Special Agent, are liable for damages under 42 U.S.C. § 1983 for violating Plaintiffs' constitutional rights and under state law for causing them emotional distress. (Doc. 1, Compl., filed July 2, 2008.)

Defendants move to dismiss the allegations, arguing: (1) the two-year statute of limitations for claims brought under section 1983 has passed; (2) Plaintiffs' first cause of action alleging that Defendants violated their Fourteenth Amendment rights by misrepresenting evidence to prosecutors resulting in Kaschak's wrongful arrest and prosecution does not state a claim upon which relief may be granted; (3) Eleventh Amendment immunity bars Plaintiffs' claims against Defendants Chiang and Railsback in their official capacities; (4) Plaintiffs' claims against Chiang in his individual capacity are not cognizable; and (5) Plaintiffs' state law claims must be dismissed because Plaintiffs failed to comply with California's tort claim presentation procedure. (Doc. 13-2 at 2, filed Sept. 8, 2008).) Alternatively, Defendants maintain that any claims that survive the motion to dismiss should be stayed pending resolution of the pending criminal proceedings against Kaschak. (Id. at 3.)

Plaintiffs oppose dismissal, arguing: (1) the discovery rule requires tolling of the section 1983 statute of limitations; (2) the first cause of action alleges sufficient facts to sustain a claim for pretrial deprivation of liberty; (3) the Complaint properly alleges a 1983 claim against Chiang in his individual capacity; and (4) non-compliance with California's tort claim presentation procedure does not require dismissal. (Doc. 17 at 2-3, filed Nov. 6, 2008.)


Plaintiffs allege that on February 23, 2006, in the early morning hours, approximately 20 FTB agents "stormed" Plaintiffs' residence at 2400 Van Pelt, in Modesto, California, pursuant to a search warrant that was "obtained under false pretenses," based in part on false allegations that Kaschak evaded his tax obligations to the State of California. (Compl. ¶¶ 8-9.)

During the course of the search, the Complaint alleges that Plaintiffs were "held for several hours, denied use of their telephone or contact with any attorney or counsel, denied use of the washroom, and denied basic food and water." (Id. at ¶10.)

Prior to the search, Kaschak, who is an orthopedic trauma surgeon, had been on call in the emergency room for eight consecutive days, with little or no sleep. (Id. at ¶11.) He allegedly informed the FTB agents that he was sleep deprived. (Id. at ¶12.) The Complaint allege that, despite Kaschak's state of sleep deprivation, FTB agents "interrogat[ed]" Kaschak and Rivas for over two hours. (Id.) Allegedly, Kaschak requested permission to contact an attorney, but FTB agents denied this request. (Id.) FTB agents did not inform Plaintiffs of the subject or nature of their search, nor of the accusations against them, despite Plaintiffs' "repeated requests for such information." (Id. at ¶13.)

On January 9, 2007, Kaschak was arrested by FTB agents and charged with multiple felony counts of tax evasion for alleged failure to file state income tax returns for the years 2000-2004. (Id. at ¶14.) At the time of his arrest, Kaschak allegedly inquired as to the charges against him, but the arresting agents claimed to have no knowledge of the charges. (Id. at ¶15.)

Kaschak later learned that FTB had issued a press release earlier that day, detailing the charges against him. (Id.) The bail request filed by FTB also outlined the charges. (Id.) Bail was set at $250,000. (Id. at ¶16.)

Kaschak's arrest concluded a four and a half year investigation by the FTB. (Id. at ¶17.) Plaintiffs allege that at no point during that investigation, until service of the search warrant on February 23, 2006, were Plaintiffs notified of the nature of the investigation, nor of any tax liability for the years in question. (Id.)

Prior to his arrest, Kaschak attempted to satisfy his tax liability with the FTB. (Id. at ¶19.) Railsback allegedly responded to Kaschak's inquiry in a May 3, 2006 letter, stating that she had never solicited any tax payments from Kaschak and had no intention of doing so. (Id.) Plaintiffs assert that this violates FTB procedures, which provide that "it is the responsibility of []FTB representatives to...[m]ake every reasonable attempt to resolve the collection issues with the designated representative." (Id. at ¶19.)

Plaintiffs allege that the investigation report prepared by Railsback, which led to the arrest of Kaschak, contains "lies, material omissions, and/or misleading statements." (Id. at ¶18.)

Plaintiffs' First Cause of Action, for "Denial of Due Process Under 42 U.S.C. § 1983," alleges Defendants conspired to (a) deny Plaintiffs their right to counsel during the "interrogation," (b) write false complaints, (c) misinform prosecutors of the bases for charges against Kaschak, (d) institute criminal proceedings against him without lawful bases, and (e) prosecute him without required notices and/or statements of tax deficiency. (Id. ¶¶ 23-32.) The Second Cause of Action alleges that FTB agents used excessive force when they (a) searched Plaintiffs' residence on February 23, 2006, and (b) affected Kaschak's arrest on January 9, 2007. (Id. at ¶¶ 33-41.)

The Complaint also contains state law causes of action for Negligent (Third Cause of Action) and Intentional (Fourth Cause of Action) Infliction of Emotional Distress, as well as a Conspiracy claim (Fifth Cause of Action).


Federal Rule of Civil Procedure 12(b)(6) provides that a motion to dismiss may be made if the plaintiff fails "to state a claim upon which relief can be granted." In deciding whether to grant a motion to dismiss, the court "accept[s] all factual allegations of the complaint as true and draw[s] all reasonable inferences" in the light most favorable to the nonmoving party. TwoRivers v. Lewis, 174 F.3d 987, 991 (9th Cir. 1999); see also Rodriguez v. Panayiotou, 314 F.3d 979, 983 (9th Cir. 2002). "To avoid a Rule(b)(6) dismissal, a complaint need not contain detailed factual allegations; rather, it must plead 'enough facts to state a claim to relief that is plausible on its face.'" Weber v. Dept. of Veterans Affairs, 521 F.3d 1061 (9th Cir. 2008) (citing Bell Atlantic v. Twombly, 127 S. Ct 1955, 1974 (2007) (rejecting interpretation of Rule 8 that permits dismissal only when plaintiff can prove "no set of facts" in support of his claim). A court is not "required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).*fn1

The defendant bears the initial burden of demonstrating that the statute of limitations has run in 1983 cases. Cooey v. Strickland, 479 F.3d 412 (6th Cir. 2007). If the complaint pleads facts that show a suit is time-barred, dismissal may be appropriate, unless the statute of limitations can be tolled. See Fink v. Shedler, 192 F.3d 911, 914 (9th Cir. 1999). Plaintiff bears the burden of establishing the applicability of tolling doctrines. Hinton v. Pac. Enter., 5 F.3d 391, 395 (9th Cir. 1993).


A. Motion to Dismiss

1. Statute of Limitations

A two year statute of limitations applies to Plaintiffs' section 1983 claims. Maldonado v. Harris, 370 F.3d 945, 954 (9th Cir. 2004 (applicable statute of limitations for § 1983 actions is drawn from forums state's limitations period for personal injury actions; in California, a two year limitations period was made effective as of January 1, 2003). The accrual date of a section 1983 cause of action is a question of federal law. Wallace v. Kato, 127 S.Ct. 1091, 1095 (2007). The standard rule is that accrual occurs "when the plaintiff has a complete and present cause of action, that is, when the plaintiff can file suit and obtain relief." Id. (internal citations and quotations omitted).

Defendants argue that to the extent Plaintiffs' First and Second Causes of Action arise out of the February 23, 2006 search of Plaintiffs' residence, the applicable accrual date was February 23, 2006, the date of the search, more than two years before the filing of the complaint on July 2, 2008. (Doc. 13-2 at 5.)

The First Cause of Action contains a mixture of allegations:


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