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Osterman v. Department of Treasury

United States District Court, S.D. California

July 11, 2016

CHARLES B. OSTERMAN, Plaintiff,
v.
DEPARTMENT OF THE TREASURY, INTERNAL REVENUE SERVICE, DIRECTOR OF INTERNAL REVENUE SERVICE, AND LAYNE CARTER REVENUE AGENT, Defendants.

          ORDER GRANTING MOTION TO DISMISS

          BARRY TED MOSKOWITZ, CHIEF JUDGE

         The United States of America has filed a motion to dismiss the Complaint pursuant to Fed.R.Civ.P. 12(b)(5), or, in the alternative, to dismiss the Complaint in part pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction and pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. For the reasons discussed below, the United States’ motion to dismiss is GRANTED.

         I. BACKGROUND

         On July 7, 2015, Plaintiff Charles B. Osterman commenced this action. In his Complaint, Plaintiff seeks tax refunds for tax years 2002, 2003, 2008, 2009, 2010, and 2011. Plaintiff alleges that he is owed refunds totaling $11, 501.00 in addition to interest and penalties. (Compl. at 13-15.) Plaintiff also seeks damages in the amount of $250, 000 for “aggravation” and “stress” contributing to health problems. (Compl. at 15.) The Complaint also mentions that Plaintiff is seeking a permanent injunction against Defendants, enjoining Defendants from performing certain acts of harassment. (Compl. at 1.)

         II. DISCUSSION

         The United States moves to dismiss this action under Rule 12(b)(5) for insufficient service of process. The United States also moves to dismiss the following claims under Rules 12(b)(1) and 12(b)(6): (1) Plaintiff’s refund claims for tax years 2008, 2009, 2010, and 2011; (2) Plaintiff’s claim for injunctive relief; and (3) Plaintiff’s claim for monetary damages against Layne Carver and the other defendants. As discussed below, the Court finds that Plaintiff has not properly served the United States, the proper defendant, as required by Rule 4(i). The Court also finds that dismissal of the claims that are the subject of the United States’ Rule 12(b)(1) and 12(b)(6) motion is warranted.

         A. Sufficiency of Service of Process

         As an initial matter, the Court determines that the United States is the proper defendant in this action. A suit against IRS employees in their official capacities is essentially a suit against the United States. Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985). The Complaint does not allege any specific facts as to the “Director of Internal Revenue Service.” With respect to “Layne Carter, ” the Complaint points to a letter that was sent by Layne Carver, an Operations Manager with the IRS. This letter [Doc. 1-2 at 150-53] was an official communication cautioning Plaintiff against sending frivolous correspondence and informing Plaintiff of the IRS’s authority to collect taxes that civil penalties for the filing of frivolous income tax returns. Layne Carver was acting in his official capacity in sending the letter, and any claims against Mr. Carver or the Director of Internal Revenue Service are properly brought against the United States. See Lotus Mgmt. LLC v. Shulman, 2013 WL 6157313, at * 4 (N.D. Cal. Nov. 22, 2013) (dismissing IRS employees acting in official capacity and substituting in United States as proper party defendant).

         Similarly, the IRS and Department of the Treasury are not proper defendants. “It is well established that federal agencies are not subject to suits Eo nomine unless so authorized by Congress in explicit language.” City of Whittier v. United States Dep’t of Justice, 598 F.2d 561, 562 (9th Cir. 1979) (internal quotation and citation omitted). See also Castleberry v. Alcohol, Tobacco & Firearms Div. of Treasury Dep’t, 530 F.2d 672, 673 n. 3 (5th Cir. 1976) (explaining that Congress has not authorized suits against the Department of the Treasury or any of its division or branches).

         Accordingly, the Court dismisses this action as against the Department of Treasury, the Internal Revenue Service, Director of Internal Revenue Service, and “Layne Carter.” The Court substitutes in as the proper party defendant the United States of America.

         However, the United States must be properly served with the Summons and Complaint. Plaintiff has attempted to serve Defendants, but it does not appear that he has done so properly.

         Fed. R. Civ. P. 4(i) governs the service of the United States and its agencies, corporations, officers, or employees. Under Rule 4(i), the plaintiff must serve the United States as follows:

United States. To serve the United States, a party must:
(A)(i) deliver a copy of the summons and of the complaint to the United States attorney for the district where the action is brought--or to an assistant United States attorney or clerical employee whom the United States attorney ...

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