United States District Court, S.D. California
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
JAMES LORENZ UNITED STATES DISTRICT JUDGE
before the Court is Defendant's motion to dismiss
pursuant to Federal Rules of Civil Procedure 12(b)(1) and
12(b)(6). Plaintiff filed an opposition and Defendant
replied. The matter is submitted on the briefs without oral
argument. See Civ. L. R. 7.1(d)(1). For the reasons
stated below, Defendant's motion is GRANTED.
Gerald and Sharon Wroblewski (“Plaintiffs”) filed
this action against the United States ("Defendant")
based on their dispute with the Internal Revenue Service
(“IRS”) regarding their personal income tax
liabilities for the years 1994 to 2010. (See Compl.
[Doc. 1] ¶¶ 4-7.) In 2007, the IRS, represented by
the United States Department of Justice, filed suit against
Plaintiffs to recover federal income tax assessments for the
years 1994 to 2002. (U.S. Dist. Ct. S. Dist. Cal. case no.
07cv81-BTM-WMC.) In 2009, the Court entered judgment against
Plaintiffs. (Id. doc. no. 72.)
2013, Plaintiffs submitted separate “offers in
compromise” to the IRS for the years 1994 to 2006 and
the year 2010. (See Compl. ¶ 7.) The
IRS accepted these offers in September 2013. (Id.)
Plaintiffs completed all the terms of the offers.
(Id. ¶ 8.) On July 2, 2014, the IRS revoked and
rescinded its acceptance of Plaintiffs' offers, and
demanded that the balance of their federal tax liabilities
for the years covered by the offers, in the amount of $577,
418.16, be paid immediately. (Id. ¶ 11 &
allege that in unilaterally revoking and rescinding its
acceptance their offer, the IRS violated 26 U.S.C. §
7122, and that this entitles them to damages under 26 U.S.C.
§ 7433. (Compl. ¶¶ 12-22.) Section 7433
provides a private right of action when an employee or
officer of the IRS “recklessly, intentionally, or by
reason of negligence disregards any provision” of the
tax code “in connection with any collection of a
Federal tax.” 26 U.S.C. § 7433(a). Defendant filed
a motion to dismiss pursuant to Rule 12(b)(1) for lack of
subject matter jurisdiction, and pursuant to Rule 12(b)(6)
for failure to state a claim.
12(b)(1) provides for dismissal if subject matter
jurisdiction is lacking. Unlike State courts,
Federal courts are courts of limited jurisdiction. They
possess only that power authorized by Constitution and
statute, which is not to be expanded by judicial decree. It
is to be presumed that a cause lies outside this limited
jurisdiction, and the burden of establishing the contrary
rests upon the party asserting jurisdiction.
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 377 (1994) (citations omitted). Federal courts must
satisfy themselves of jurisdiction over the subject matter
before proceeding to the merits of the case. Ruhrgas AG
v. Marathon Oil Co., 526 U.S. 574, 583 (1999). Subject
matter jurisdiction cannot be waived, and the court must
dismiss an action whenever it determines subject matter
jurisdiction is lacking. Fed.R.Civ.P. 12(h)(3); see also
Hansen v. Dep't of Treasury, 528 F.3d 597, 600 (9th
argues that subject matter jurisdiction is lacking because
Plaintiffs have not exhausted their administrative remedies.
They rely on 26 U.S.C. § 7433(d)(1), which provides that
“[a] judgment for damages shall not be awarded under
[26 U.S.C. § 7433(b)] unless the court determines that
the plaintiff has exhausted the administrative remedies
available to such plaintiff within the Internal Revenue
Service.” The Ninth Circuit made its interpretation of
this requirement clear when it found that "the court
lacked jurisdiction to hear" the case, where the
plaintiff taxpayer filed an action “against the United
States under 26 U.S.C. § 7433 without exhausting her
administrative remedies.” Conforte v. United
States, 979 F.2d 1375, 1377 (9th Cir. 1992).
exhaust administrative remedies, a plaintiff must file an
administrative claim before filing an action in district
court. 26 C.F.R. § 301.7433-1(d). Specifically,
“[a]n administrative claim … shall be sent in
writing to the Area Director ... of the area in which the
taxpayer currently resides.” Id. §
301.7433-1(e)(1). A cause of action in federal district court
may not be maintained before the earlier of (1) the date a
decision on the administrative claim is rendered; or (2) the
date six months after the administrative claim is filed.
Id. § 301.7433-1(d)(1).
baldly allege that they have exhausted all available
administrative remedies. (Compl. ¶ 24.) Defendant
disputes this by filing an affidavit showing that Plaintiffs
have not exhausted. Plaintiffs do not provide any evidence in
a Rule 12(b)(6) motion, a Rule 12(b)(1) motion can attack the
substance of a complaint's jurisdictional allegations
despite their formal sufficiency and in so doing rely on
affidavits or any other evidence properly before the
court.” St. Clair v. City of Chico, 880 F.2d
199, 201 (9th Cir. 1989). A Rule 12(b)(1) motion for lack of
subject matter jurisdiction may be “facial” or
“factual.” Safe Air for Everyone v.
Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). "In a
facial attack, the challenger asserts that the allegations
contained in a complaint are insufficient on their face to
invoke federal jurisdiction." Id. By contrast,
in a factual attack, "the challenger disputes the truth
of the allegations that, by themselves, would otherwise
invoke federal jurisdiction." Id. In resolving
a factual attack, the court "may review evidence beyond
the complaint without converting the motion to dismiss into a
motion for summary judgment." Id. (citation
omitted). If the defendant makes a factual attack "by
presenting affidavits or other ...