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Halliday v. Spjute

United States District Court, Ninth Circuit

October 1, 2013

GLEN HALLIDAY, MICHAEL S. IOANE, SR., SHELLY IOANE, ASHLEY M. IOANE, MICHAEL S. IOANE, JR., Plaintiffs,
v.
KENT R. SPJUTE, JEAN NOLE, JEFF HODGES, BRIAN APPLEGATE, MICHELLE M. CASAREZ, UNKNOWN DOES 1-20, AND THE UNITED STATES OF AMERICA, Defendants.

ORDER RE: MOTION TO DISMISS AND MOTION FOR LEAVE TO AMEND (Docs. 131 and 146)

ANTHONY ISHII, District Judge.

I. History[1]

Plaintiffs Michael Ioane Sr., Shelly Ioane, Ashley Ioane, and Michael Ioane Jr. live at 1521 Fruitland Ave., Atwater, CA. Plaintiffs are involved in tax disputes with Defendant United States. Additional Defendants Kent Spjute, Jean Nole, Jeff Hodges, Brian Applegate, and Michelle Casarez are Internal Revenue Service agents ("Federal Agents"). Based on the affidavit of Kent Spjute, the United States was able to obtain a search warrant for Plaintiffs' residence. The search was carried out by the Federal Agents on June 8, 2006. The precise relationship of Plaintiff Glen Halliday to this case is unclear.

Plaintiffs filed suit on April 20, 2007. Doc. 1. They filed an amended complaint ("FAC") as a matter of right on January 14, 2008. Doc. 39. In the FAC, Plaintiffs listed six causes of action, alleging that Federal Agents executed an overbroad search warrant, deprived Plaintiffs of due process by seizing property, used excessive force, violated Shelly Ioane's bodily privacy, violated the First Amendment by seizing organization membership lists. Plaintiffs allege the Federal Agents were under the supervision of Defendant Does who failed to adequately instruct, control, and/or discipline Federal Agents for their conduct. They also allege the United States disclosed tax information about the Plaintiffs to third parties in violation of 26 U.S.C. ยง 6103.

Defendants made a motion to dismiss the complaint for lack of jurisdiction, failure to state a claim, and qualified immunity. Doc. 44. The due process, First Amendment, and unauthorized disclosure of tax information causes of action were dismissed without prejudice but with leave to amend. Doc. 61, September 24, 2008 Order. Plaintiffs stated claims for unreasonable search and seizure as well as excessive force and bodily privacy; the supervisor liability cause of action was not challenged by Defendants. Plaintiffs filed a second amended complaint ("SAC") that listed six causes of action which were a mixture of old and new claims: (1) unreasonable search and seizure, (2) excessive force, (3) First Amendment, (4) retaliation, (5) supervisor liability, and (6) unauthorized disclosure of tax information. Doc. 61, SAC.

The case was then stayed pending resolution of a criminal case against Michael Ioane Sr. for tax fraud, based in part on the evidence seized during the search at the heart of this case. Crim. Case. No. 09-0142. Michael Ioane Sr. was convicted on October 3, 2011 after a jury trial. His conviction is being appealed. In the meantime, the stay was lifted in this case.

Defendants made a new motion to dismiss. Doc. 132. Plaintiffs opposed the motion. Doc. 141. As part of their opposition, Plaintiffs asked for this case to be stayed pending final resolution of Michael Ioane's appeal. Plaintiffs' motion to stay was denied. Doc. 158. Plaintiffs also made a motion to amend their complaint, and attached a proposed third amended complaint ("TAC"). Doc. 146. All of these matters were taken under submission without oral argument.

II. Legal Standards

Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Navarro v. Block , 250 F.3d 729, 732 (9th Cir. 2001). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds' of his entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atl. Corp. v. Twombly , 127 S.Ct. 1955, 1964-65 (2007), citations omitted. The 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). The court must also assume that "general allegations embrace those specific facts that are necessary to support the claim." Lujan v. Nat'l Wildlife Fed'n , 497 U.S. 871, 889 (1990), citing Conley v. Gibson , 355 U.S. 41, 47 (1957), overruled on other grounds at 127 S.Ct. 1955 , 1969. Thus, the determinative question is whether there is any set of "facts that could be proved consistent with the allegations of the complaint" that would entitle plaintiff to some relief. Swierkiewicz v. Sorema N.A. , 534 U.S. 506, 514 (2002). At the other bound, courts will not assume that plaintiffs "can prove facts which [they have] not alleged, or that the defendants have violated... laws in ways that have not been alleged." Associated General Contractors of California, Inc. v. California State Council of Carpenters , 459 U.S. 519, 526 (1983).

In deciding whether to dismiss a claim under Rule 12(b)(6), the Court is generally limited to reviewing only the complaint. "There are, however, two exceptions.... First, a court may consider material which is properly submitted as part of the complaint on a motion to dismiss... If the documents are not physically attached to the complaint, they may be considered if the documents' authenticity is not contested and the plaintiff's complaint necessarily relies on them. Second, under Fed.R.Evid. 201, a court may take judicial notice of matters of public record." Lee v. City of Los Angeles , 250 F.3d 668, 688-89 (9th Cir. 2001), citations omitted. The Ninth Circuit later gave a separate definition of "the incorporation by reference' doctrine, which permits us to take into account documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff's pleading." Knievel v. ESPN , 393 F.3d 1068, 1076 (9th Cir. 2005), citations omitted. "[A] court may not look beyond the complaint to a plaintiff's moving papers, such as a memorandum in opposition to a defendant's motion to dismiss. Facts raised for the first time in opposition papers should be considered by the court in determining whether to grant leave to amend or to dismiss the complaint with or without prejudice." Broam v. Bogan , 320 F.3d 1023, 1026 n.2 (9th Cir. 2003), citations omitted.

If a Rule 12(b)(6) motion to dismiss is granted, claims may be dismissed with or without prejudice, and with or without leave to amend. "[A] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith , 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc), quoting Doe v. United States , 58 F.3d 494, 497 (9th Cir. 1995). In other words, leave to amend need not be granted when amendment would be futile. Gompper v. VISX, Inc. , 298 F.3d 893, 898 (9th Cir. 2002).

III. Discussion

A. First Cause of Action - Search and Seizure

For the first cause of action, Plaintiffs allege in key part, "13. The warrant purported to authorize the seizure of virtually any document found, and any computer equipment and software, bank/credit card, phone/address books, phone records, rolodex cards, etc. concerning 1999 to the present concerning a specific list of names, plus persons or entities unknown' and names unknown or entities unknown.' 14. The warrant was overbroad and void on its face." Doc. 64, SAC, 2:25-3:1. This language is identical to that contained in the prior complaint. See Doc. 339, FAC, 2:25-3:2. In response, Defendants make two arguments: (1) the claim ...


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